BeamaLife Blog

There’s no question that for many people, money is tight these days.  And when you’re low on options for increasing your income, your thoughts may turn to that life insurance policy that you’ve been paying on for so many years.  You could sell it in what’s called a “life settlement,” but is that the right move?

According to The Wall Street Journal, more than $10 billion worth of life insurance policies were sold this way last year along.  The concept is pretty simple.  You sell your life policy for less than its face value, and when you die, the third party gets the payout from the policy.  You get the cash you need right now. 

In my experience, there definitely are times when selling your life insurance to another party makes sense.  When you no longer need the life insurance – for example, when your kids are grown and gone, your house is paid for, and you’ve got enough money to cover any estate taxes that will be due when you’re gone yourself. 

But it’s difficult to determine just how much your life insurance policy might be worth to another party.  If you’re 70 years old and have a policy with a $1 million face value, would you take $250,000 for it today?  Or even $400,000? 

And there are other factors to be considered as well.  There is no more life insurance benefits for your loved one, somebody is waiting for you to die, and there’s plenty of paperwork to go around.  According to current industry transaction, you as the seller should not expect to walk away with much more than 20 cents in return for every dollar of the policy’s face value. 

So if you’re in a cash crunch, and you’re thinking that selling your life insurance might be a way out, be sure to talk to a couple of expert  advisors at (866) 972-3262 before you take the plunge.  It may be a good move for you, but you bought the life insurance for a reason.  Most people would shudder at the thought of choosing to lose 80% of their investment.  You should too. Let me know what you think…