How to Sell Your Life Insurance Policy and Provide for Your Retirement

April 4, 2020

You’re ready to start living in retirement. Congratulations, this is an exciting time in your life. But, you also have a few concerns. You’re looking into additional assets to ensure you can meet all your expenses while you’re no longer working. We understand.

With life expenses increasing, most seniors today need to tap into additional sources of income for retirement. So what are your options?

One way to get a lump sum of cash is to sell your life insurance policy. This transaction is called a life settlement, and there’s a good chance you qualify for it.


To help you navigate this process, we’ve broken it down in three steps.


Here’s a mini-guide on how to sell your life insurance policy and provide for your retirement:

  • Step 1: See if you qualify for a life settlement
  • Step 2: Get an appraisal of your life insurance policy
  • Step 3: Decide if you want to sell your policy

 

Step 1: Do you qualify for a Life Settlement?

While a life settlement sounds like a great idea, your first step is to find out if you qualify for this type of transaction. This step should be relatively fast and easy and something you can do over the phone or on the computer.
Ask yourself the following questions:

  • Am I 70 years old or older?
  • Do I have a life insurance policy of $100,000 or more?
  • Has my health changed since I bought my policy?

If you answered yes to all three questions, you might qualify for a life settlement. To find out for sure, you’ll need to contact a life settlement company and provide some of your information.

Tip: Make sure the company you work with is licensed and discloses all fees and commissions.


Step 2: Get an Appraisal for Your Policy

Once you determine that you qualify for a life settlement, the next step is to get an appraisal for your policy. An appraisal for a life settlement is the market value for your policy. This second step should also be relatively fast and easy.

Here are a few tips when getting an appraisal for your life policy:

  • Don’t settle for less than you deserve. The offer should be more than the policy’s cash surrender value and accelerated death benefits at the time of purchase.
  • Understand how the sale will be taxed. Always consult your tax professional to learn how the life settlement will be taxed. In some cases, the sale can be tax-free so it’s important to deal with a professional who understands the laws.
  • Appraisals should be free. Pass on any appraisal process that includes a fee.

With an appraisal of your policy, it’s time to make a decision. After all, you should never feel pressured to sell your life insurance policy. The goal is to make a decision that will give you peace of mind and help you pay your expenses in the long run.


Step 3: Make a Well-Informed Decision to Sell Your Policy

Should you sell your life insurance policy? Ultimately, this decision is up to you or a trusted family member who is helping you with your financial decisions.
To help you make this decision, remember the following facts about life settlements:

  • You have access to information. A life settlement transaction shouldn’t be confusing. You are entitled to important disclosures about the transaction, including information about your policy and alternatives to selling the policy.
  • Everything is transparent and honest. Selling your life insurance policy for retirement is a great idea and one that everything that matters will be aware of. Rest assured that your beneficiaries are made aware of and acknowledge this type of transaction so that everyone is on the same page.

With all the information at your fingertips, you can decide if a life settlement is the best way for you to access much-needed cash for your retirement. If you have any questions about this process, please contact us today.