(Family Features)--Life insurance is a valuable asset, but over time you may find that your life insurance no longer fits your situation. You might be surprised to learn that in addition to your home, stocks, bonds and antiques, your life insurance is another asset you can sell.
Life insurance policies can be converted to immediate cash through a life settlement, but as many as 85 percent of seniors don't realize this option is available, according to a survey conducted by Coventry Direct.
A life settlement is a financial transaction in which a policy owner sells an unneeded life insurance policy for more than they would have received from the insurance company if they were to lapse or surrender the policy. Most life insurance policy types qualify, including universal life, whole life, variable life, survivorship and even term life policies.
Among the reasons you might consider a life settlement:
- Your life insurance policy is too expensive to maintain. If your premium payments have continued to increase, your policy may no longer be affordable. However, simply allowing the policy to lapse results in a total loss of the premiums you have paid.
- You have more life insurance than you currently need. As your circumstances and need for financial protection change, you may want to reduce the overall insurance you own. For example, if your policy was intended to pay off your mortgage in the event of your death, but you've since sold the home or paid off your mortgage, you may not need the same amount of coverage.
- You need help with increasing medical or long-term care expenses. Selling your policy can help cover your immediate needs for health care or other unforeseen medical expenses.
- Increasing your retirement funds will increase your peace of mind. The proceeds from the sale of your policy can help boost your savings and supplement your retirement income.
- Your debt load exceeds your comfort level. Whether a single emergency incident or a combination of variables compounded your debt, working your way out can be emotionally and mentally draining, but applying untapped assets to reduce the burden may help.
For example, one policy owner no longer had a need for several life insurance policies totaling $500,000. The life insurance company would only pay him the cash surrender value of $28,500. Instead, he contacted Coventry Direct and was able to sell the policies for $110,000, which he used to supplement his retirement and plan a family vacation.
Source: Coventry Direct
Published with permission from RISMedia.