If you’re looking to close out your current life insurance policy, you may be eligible to sell your plan. Known as life insurance settlement, opting to “settle” one’s insurance policy often allows individuals in specific circumstances to gain greater access to immediate cash resources.
What are Life Settlements?
If opting for a life settlement, then a policy holder must generally be above the age of 65, have a high net worth policy, and / or are experiencing or anticipate an upcoming impaired state of health. Generally, individuals can settle their life insurance policies by option for coverage plans such as:
- Term
- Whole
- Universal
- Key man (reserved for businesses)
- Survivorship
- Convertible
What is a Viatical Settlement?
For individuals in need of immediate cash assistance amidst a time of serious / potentially deadly illness, opting for a viatical life insurance settlement may be ideal. Viatical settlements are specifically catered to involve a policy holder with a terminal illness. Because of the policy holder’s illness, he or she may wish to sell / settle his / her life insurance policy in exchange for immediate compensation and access to funds. Generally, these funds can be used to allow ill policy holders to pay for medications, medical treatments, or cover other costs. A viatical life settlement is generally restricted to individuals with a life expectancy of five years or less.
Am I Eligible for a Settlement?
Generally, individuals are eligible to settle / sell their life insurance polices if they meet some or all of the following criteria:
- At or above the age of 65
- Life expectancy is a minimum of two years to 18 years (although this may vary depending on the provider’s restrictions)
- Proof of holding the insurance policy for a minimum number of years
To find out the pros and cons of settling your life insurance policy, speak with a provider’s representative to find out more details. Also, keep in mind that choosing to settle your policy may result in serious reductions / cancellation penalties; therefore, policy holders generally only opt to settle their life insurance package if in seriously dire circumstances.
