One of the smartest things you could ever do in your life is to get life insurance. It is beneficial to you and to your dependents. It gives you peace of mind that should anything happen to you, your family will be well taken care of until such time that they can stand on their own two feet. However, the benefits of a life insurance don’t stop there.
Insurance is also like an investment. If the time comes that you need cash badly, you will be able to sell your insurance in order to deal with a financial problem. This process is called a life settlement. This doesn’t mean that you should immediately sell your insurance because you have to pay some bills. You should only do this when you truly need money for medical care or you can no longer afford to pay for the premium. You can also get a life settlement if you are confident that your dependents don’t need the money.
First, you need to have a better understanding of how a life settlement works and if it’s for you.
What is a Life Settlement?
As mentioned above, a life settlement is when you sell your life insurance policy to a third person. This third person is not a member of your family and is not the company that you pay your premium to. Life settlements are almost similar to viatical settlements that have become common in the ‘80s when patients who were terminally ill started selling their life insurance policies in order to pay for medical bills or they could no longer afford to pay the premium because of medicare. Life settlements, on the other hand, include policy holders who are not terminally ill.
How Do You Go about Getting a Life Settlement?
Typically, policy holders only have to go through a few steps to process the life settlement transaction. You can read this life settlements guide for more information, and here are the things you need to do:
- Choose a reputable life settlement provider. Choosing a life settlement provider may be the most important thing you need to do after you have decided to sell your life insurance. There are providers who do not take care of their clients and only want to buy the insurance policies in the lowest amount possible. This is not a win-win deal. Just because policy holders are in dire need of money does not mean that they should be robbed of their life insurance.A reputable life settlement provider like Q Life Settlements will give you the right calculations and offer you the best deal that they could give—a deal that is good for both parties.
- Apply for a life settlement and qualify. When you have chosen a good life settlement provider, you will need to apply for one. You will be required to fill out a form and you will need to give the provider access to your medical records. You will also have to divulge all the information on your life insurance policy. The provider will also ask for an authorization to contact the insurance company from where you got the policy.
- Wait for the provider’s offer. When you have qualified for it, the provider will need to calculate carefully the amount of money that is due to you.There are some factors that would affect the calculation of the life settlement and determine its value. The first one would be your medical condition. If you were terminally ill, for example, and your life expectancy is very short, the value of the policy is higher. So, shorter life expectancy means higher value. This will all depend on your medical records.
The amount of the insurance policy is also another factor as well as if there were loans that were taken against the policy. Depending on which state you live in, there could also be laws in place that regulate this type of transaction.
- Receive your payment. When you and the provider have come to an agreement, all that’s left to do is for you to receive your payment.
Life settlements should be considered carefully. It should not be the answer to a simple financial problem. You got a life insurance for several reasons and you should remember that before you sell your insurance policy. However, in the event that you can no longer pay for the premium or you are terminally ill and need the cash badly, then life settlements should seriously be considered.
When you do decide to go for a life settlement, make sure that you are protected. Do your research or ask those who have already done this type of transaction.