For those of you who have followed this forum long enough you may think I hate when you want to sell your life insurance policy to a life settlement company. OK, it is true that my first take on life settlements eight or so years ago was harsh. I didn’t trust the idea and even debated the con side of the subject on BBC radio and other forums. I was not convinced that when a disinterested company owned life insurance on a person, well, that they might find away to help along your mortality during a low profit year.
The Evolution of The Life Settlement Industry
That was then and this is now and two important changes have evolved in the life settlement industry and me personally. First, let’s talk about life settlement companies and how they and their systems have changed. Even those who have been sold on life settlements since their inception would agree that eight years ago, and far prior to that, was the wild west phase of the industry, much like indexed universal life is now. The common link there is that both were mired in far fetched assumptions.
But let’s stick to the topic: the idea to sell your life insurance policy, otherwise known as doing a life settlement.
Life Settlement: How It Used To Be
Back “in the day” one of the most alluring propositions was that you could sell your life insurance policy at the end of its’ guaranteed term level premium period, and, even if you were in perfect health, recoup the premiums that you had paid in over the years.
Essentially they were alluding to the idea that you could have your cake (life insurance) and eat it too (sell it when you didn’t need it anymore).
Sell Your Life Insurance Policy
The industry now is far more cautious about what they will and won’t buy and how much they will pay.
Now, there is a definite link between your health when you took the insurance out and your health when you decide to sell your life insurance. To put it bluntly, you have to be sicker when you sell it than when you bought it. And, even if you are sicker, depending on how sick, they may not want to buy if you are too young. It would be highly unlikely to be able to sell your life insurance policy until your mid 60’s unless your health had deteriorated somewhat.
Life Insurance Settlements: Now
Along with becoming more comfortable with the more professional process the industry has embraced, I have actually helped some people with the sale of life insurance that they would have otherwise let lapse. One of those is me.
I had a $500,000 policy coming to the end of a 20 year term. I will likely still live to a normal life span, but I have issues that I didn’t have 20 years ago when I was rated at the best rate class. Those health issues aren’t keeping me from living, working and enjoying life, but they are significant enough that if I bought life insurance now I most certainly wouldn’t be rated preferred plus. The settlement will be for more than I paid into the policy over 20 years. This is a policy that I couldn’t afford to convert and keep so it’s definitely a win for me.
If you are just going to let a policy lapse because you don’t need it anymore, and it is still convertible to a permanent plan, consider how your health has changed since when you first took that policy out. If it’s gone down hill some, call or email me directly and I will get you some information on the process and what to expect. My name is Ed Hinerman. Let’s talk.