People show interest to own life insurance that will maintain the financial stability of their family after their death. You may sometimes fail to decide whether to pay premiums for the policy or to sell the policy. Selling insurance policy depends on your choice and decision, and people often calls the whole process as life settlement.
Basic facts of selling a Life Insurance Policy–
Selling a life insurance policy means you are selling the policy as well as the benefits associated with the policy to any third party to get funds based on the deal in return. Now the third party who bought the policy from you will become the owner of the policy. The new owner of the policy will get the death benefits after the death of the policyholder and he needs to pay the remaining premiums of the policy. The policyholder abandons all the rights for a policy after selling the policy. The selling of life insurance policy can be of many types such as life settlement and viatical settlement. In life settlement a person sells a policy if he or she wants to purchase a new policy or when paying premium payments becomes difficult or other. In a viatical settlement, a person sells policy when he or she is chronically ill or not in good health condition.
How to get money from your life insurance policy before death –
Sometimes you may want to get money from your insurance during your financial crisis while you are still alive. This can be done in certain ways like borrowing, cash surrender, and in case of critical health condition. Borrowing refers to the method in which you can get tax free funds from the insurance policy while it will allow you to keep your policy. In cash surrender, you can cancel the policy in exchange for your accumulated cash. In case of critical illness, you can get death benefits by showing medical reports.
Process of selling an insurance policy –
Firstly, you need to find a buyer and you can do it on your own but consultation with a professional advisor is highly recommended. You will need a broker who will give you counsel and can also help you to search for a life settlement provider. After you get an efficient buyer, you need to give him or her certain information like the nature of your policy i.e. whether it is a term life policy or whole life policy, cash surrender value, number of years left for the premium to be paid, and other personal information.
Precautions required to be taken before selling a policy –
At first check the authenticity of the people you are dealing with and whether they are licensed or not. You can talk to more than one buyer to get the best value out of your policy. Take proper advice from the organization of Life Insurance Settlement before finalizing the deal. You need to check the tax implications that would insist you to pay capital gains.
