The process of selling your insurance to cover your expenses as you grow older is nothing new; people have been doing this for quite some time now in order to avoid the pressure of financial expenses. But over time, it has become a less reasonable idea that you have to sell the insurance policy to an insurance company. That is not the case anymore; settlement companies are well qualified at helping you sell your life insurance policy at a better offer.
Whole life insurance:
This insurance can offer you a return that can vary from 4 to 6 percent each year. These types of plans have a minimal guarantee that can reach as high as 4 percent and that can be increased as dividends. Typically the death benefit is tax-free unless you choose to make a withdrawal for retirement purposes, so speak to your agent or purchaser beforehand. Since all plans are different you will have to look at the fine print before cashing your account.
Universal Life Insurance:
These plans offer the smallest returns annually, according to Investopedia, but they also have a return rate that is between 3 and 4 percent. The most profitable aspect of this plan is that you can adjust the death benefit that increases or decrease the amount of your death benefit by adjusting your annual premium payments. But it is advised that these plans should be left to fully mature they allow companies to raise the premium or even take off some of the cash value if they can’t make enough from the investment to meet their costs and still try to earn a profit.
Variable Life Insurance:
This type of insurance is based on the fixed income market as well as equity. This can be beneficial because they have annual returns that can range between 3 to 8 percent. But if the market says that the insurance is based off a fall, then this can prove negative to a policy. So read the documents and the fine print rather carefully.
How to sell your life insurance policy through a settlement company?
Life insurance policies can be a great option for people who have retired. A life settlement is basically selling off your life insurance policy to a third party in return for a lump sum amount. This concept is ideal if you don’t want your death benefit anymore and want to get the cash value as soon as possible.
While the amount of cash that you will receive will be less than the death benefit, it is typically much more than the cash surrender value. Life settlements are great for people who are facing retirements and who require the cash at present time than the future; these are the people who don’t require the death benefit to support a growing family. But want the final amount so that they can pay for their expenses and their standard of living moving forward.
Let’s think, for example, that you are 74 years old and you’re paying 35,000 dollars annually on a policy that is worth 2 million dollars. You may not want to continue to pay the premiums because they increase with time and it may be difficult to meet the insurance demands. Let’s say that you no longer need a death benefit because your children have become quite self-sufficient and are able to fend for them. So now, if you really need the money, you can sell the policy for its cash value of 250,000 dollars. In this instance, your life settlement will be 505,000 dollars.
The idea of using your insurance policy funds once you retire is not a bad idea, but by giving this concept a good head start it is recommended to speak with your financial advisor and gain some first hand advice from an expert. There are chances of other ways you can invest your money for a healthier retirement than just relying on a life insurance policy.
Financial problems can compel people to come to a decision to sell their life insurance policies. The best guidance you can receive can come from knowledgeable and neutral professionals.