One of the perks of owning an insurance policy for a long time is being able to sell it to a life settlements company for cash. A life settlement is compensated to a policyholder in the form of cash in exchange for the life insurance policy. If you're a policyholder who needs cash, you can sell your life insurance policy to a third-party, like a life settlements company or a broker who mediates the transaction between the company and you.
Once the ownership of your life insurance policy is transferred to the company or the third-party that buys your policy, you get cash for it instantly. After the ownership is passed to the third-party, they are supposed to pay for the premiums until the former policyholder passes away. After the death of the former policyholder, the third-party gets the worth of the life insurance policy.
It's a fact that life settlements are quite useful when you own the policy for a long time and are in dire need of money. People sell their policy in exchange for a life settlement to handle their medical expenses, invest in more property, if the premium increases, and so many other reasons.
However, since selling a life insurance policy involves a third-party being able to cash on the policy only after the seller dies, policyholders who sell their policy have certain concerns for all the right reasons. Here are some of the common issues raised by clients and how to deal with them.
When you sell your life insurance policy, it's obvious that you would expect a fair price in return. It doesn’t make sense to sell your life insurance policy for a price that barely means anything. However, when you sell your life insurance policy through a broker, the broker charges a heavy commission that eats up the profit from selling your policy.
This has created a mindset in people that selling their policy means entering a deal where the seller is at a loss. Some brokers might even charge half the amount of your life settlement in order to sell it. Involving a broker in your transaction might seem like a more convenient option, but it comes at the cost of paying additional charges. To make sure you’re not being overcharged while selling your life insurance policy, sell your policy through a life settlements company.
CONCERNS ABOUT CONFIDENTIALITY
Before you sell your life insurance policy to a buyer, you're supposed to provide the buyer or life settlements company information needed to see if you qualify for a life settlement and to proceed with the transaction. You might need to give away your medical history, current medical status, and details about the policy that you hold. Moreover, while you disclose personal information about yourself, you have to make sure no third-party has access to the information you provide exclusively.
This is why you should have a confidentiality agreement signed by the party you disclose your details to. This would make sure the information you provide to a party stays confidential. In addition, if the need arises for that information to be shared with someone else, the party should seek your permission before doing so.
One of the biggest concerns that policyholders who plan to sell their policy have is about the security of their life once they sell their life insurance policy. Keeping in mind the buyer would only be benefitted when the seller of the life insurance policy dies, it does cause a certain amount of insecurity. While no incident of foul play has been reported in the industry, it’s still better to take the right measures to make the right transaction.
This is why one should always sell their policy to a life settlements company that buys policies in bundles. That way, the death of a single seller won’t bring any benefits to the buyer or investor. Furthermore, avoid selling your policy to an individual without proper knowledge. It's always highly recommended to sell your policy to a licensed company so that you can avoid any foul play.
Addressing these concerns and having them answered is important. It would prevent any chances of entering a transaction that might put your life at risk or bring about a loss. Given you work through the whole process of selling your life insurance policy and getting a life settlement with a licensed life settlement company that has a good reputation, you don’t have to worry about being cheated or selling at a price that is lesser than the current market value.