Did you know that if you have a life insurance policy you can sell life insurance policy to help with medical expenses and other expenditures you have right now. This is called a viatical settlement, or life settlement, and your policy is sold to a third party investor who then pays you a sum of money, continues to pay the premiums and collects the death benefit when you die.
The most common reason for some to want to sell their life insurance policy was if they had a terminal illness and needed the money for medical expenses. Now anyone who wants some extra cash can sell life insurance policy for an immediate influx of cash.
The first thing to do is talk to you insurance agent and figure out if this is the best way for you to get some extra cash. Consider all of your options before taking any action, you want to make sure you are doing the right thing. There may be ways around selling your life insurance policy outright and still getting the cash you need.
For example, ask your insurance agent if your policy has any cash value that you can cash out. This way you can keep your policy in force and still get the cash you need. Depending on the amount of cash value in your policy, you may be able to use that cash value as collateral for a loan from your bank.
Also, your life insurance policy may have what’s called an accelerated death benefit and can pay out some of the death benefit before you die. Taking either of these actions may prevent you from having to sell your policy to an investor and let you keep your policy in force.
If you do decide to sell your life insurance policy, make the companies you research work for you and get quotes from several before making your decision about which one you will use.
When filling out all your personal information on the application, remember to answer all the questions truthfully and completely to prevent any delays in processing the sale of your policy.
A few things to keep in mind, there may be some taxes you are obligated to pay when you sell your life insurance policy. Death benefits are only tax free to the beneficiaries of the policy.
If you owe money, your creditors can and will come to claim what’s theirs if they know you have gotten a life settlement.
If you receive public assistance, you may lose some of your public assistance benefits like Medicaid and food stamps if you receive a life settlement.
You should be given a privacy statement noting who will have access to your personal information from the investor who buys your policy and they should agree to put the funds into an independent escrow account to protect them during the transfer.
These tips should help you when you want to sell life insurance policy and get the extra cash you need in these very troubled times.