Life insurance can be an important financial safety net not just for yourself, but for your loved ones in the event that you pass away. But, there are certain circumstances when selling your life insurance policy would make more sense than continuing to pay the premiums.

While it’s possible to let your policy lapse, that is not always the most strategic option. Once the policy lapses, the insurance company will look for a third party that will pay a much higher price for the policy. Instead, you might consider selling your policy directly to a third party, known as a life settlement fund.

By selling to a life settlement fund, you can get as much as 11 times the cash surrender value.

A life settlement is the legal sale of an existing life insurance policy to a third party. The policy owner sells their life insurance policy to a life settlement provider in exchange for cash. These funds can then be used to pay for medical costs, end-of-life expenses, and more.

So, how do you know when it’s time to sell your life insurance policy? In this blog, we will cover seven signs that it’s time to sell your life insurance policy.

You No Longer Need the Policy

One of the most common reasons that you might sell your policy is because you simply no longer have a beneficiary to receive the death benefit. This could be because your children have grown up, you have gone through a divorce, or your beneficiary has passed away. In other cases, your original need for the policy may no longer exist. For example, if you have a policy but no longer have a beneficiary, you may no longer want to incur the expense of paying the premiums. 

You’ve Had a Change in Financial Needs

As life goes on, your financial circumstances can change drastically. While a life insurance policy may have seemed like an important expense at one point, you may find yourself needing the expenses for more pressing matters. If you have recently gone through a financial hardship, need to pay off debt, or find yourself with other unanticipated expenses, selling your policy could provide you with the immediate cash that you need.

You Have Unexpected Healthcare Costs

If you have found yourself inundated with medical expenses, policy premiums may become overwhelming. However, rather than letting the policy lapse or surrendering it to the insurance company – which usually will only pay pennies on the dollar for the policy – you can sell it to a third party. Once you receive the lump sum, you can use the cash to pay for medical expenses and long-term healthcare costs.

The Policy is About to Lapse

If you cannot maintain the premium payments of your life insurance policy, it may lapse. Once the policy lapses, not only will you lose your coverage and any cash you have accumulated over time, but the insurance company will sell your policy to a third party for a much higher price. By selling your policy before it lapses, you can receive more cash than the policy's cash surrender value but less than the death benefit.

The Policy is Underperforming

If the life insurance policy is underperforming, it may no longer make sense for you to continue paying the premiums. In these cases, you should consider selling your policy in exchange for a lump sum of cash. This allows you to use the cash to invest in other opportunities and meet your financial goals.

The Policy Is Too Expensive

While term life insurance policies have an expiration date, permanent life insurance policies often have considerable premiums. If these premium payments have become difficult for you to maintain, it might be time to consider selling the policy to lessen the financial burden. Additionally, you can receive cash to help pay for other expenses, medical costs, or end-of-life care.

You Want to Pursue Other Investment Opportunities

If you have come across a lucrative investment opportunity but don’t have the required funds, selling your life insurance policy can be a good alternative. Since you will receive immediate cash, selling the policy can provide you with the capital that you need. This is especially beneficial if the return on investment outweighs the benefits of keeping your life insurance policy.

Get Started with Ben Mohr, LLC

Selling a life insurance policy is a significant financial decision. Before deciding to sell your policy, it is essential to consult with an experienced professional. At Ben Mohr, LLC, our team is well equipped to help you decide if selling your life insurance policy is the right choice for you. Together, we can discuss your situation and determine if selling your policy will help you meet your financial goals. To get started, get in touch with our team today!