Why do people sell their Life Insurance?

Main reasons people sell their life insurance


After speaking with clients over the past few years I have heard quite a few reasons for why someone wants to sell their life insurance. The main reason usually tends to be the need to pay for medical care or long-term care. With that said, there are also clients who simply no longer need to carry life insurance because their needs have changed. I will go over some of the main reasons that people sell their life insurance and how it benefits them in each situation.


First let’s go over what a life settlement is; When you sell your life insurance policy to a third party for cash, this is known as a life settlement. The amount it can be sold for will be greater than the cash surrender value of the policy but less than the death benefit, also referred to as the face value of the policy. When you sell a policy, the buyer will continue paying the insurance company's premiums and collect the death benefit.


When the only other options are to surrender the insurance or let it lapse, life settlements are frequently worthwhile to consider. Policyholders of any age who have substantial health limitations are eligible. Before making this choice, anyone thinking about a life settlement should speak with a financial counselor.


Now let’s look at a couple of the main reasons people sell:



  • One of the main reasons people look at selling their policy is, their term policy is coming to an end and the premiums to convert it to a whole life product are 10-20x more. This makes it almost unaffordable for most people to even consider keeping the policy. In this scenario the insurance carrier is hoping that the policy is just let go and that the client will possibly buy a new lower face value policy. They can sell that policy and let the buyer deal with converting it to a whole life product. If the client still wants to be insured, they can use the cash from the sale of their initial policy to get into a new policy!


  • The need for retirement funding, long term care, paying bills, or even for personal leisure. Over the last 20 years retirement savings have been reduced because of the economic downturn. The need for cash in hand has grown over the years for multiple reasons. With an asset such as a life insurance policy, many find it beneficial to sell their policy to alleviate financial stress.


  • Another reason as mentioned before is so that the client can cover medical bills and other expenses. In many cases the client is out work and overly burdened with bills. Selling their life insurance gives them a cushion to pay those bills and still live comfortably while dealing with their immediate medical needs.


  • Clients may also want to sell because they no longer want to pay monthly premiums. Especially in cases where the premiums are constantly rising, and it begins to stretch the client thin. This is one of the reasons many let their life insurance policy lapse.

A life settlement helps the client alleviate the stress of paying premiums and recoup some of the investment they have put into the policy over the years. 



With these being some of the main reasons that people sell their life insurance policy, there are numerous reasons for why someone might want to consider a life settlement. Knowing all your options when it comes to your life insurance, it’s important to know what it might be worth if you wanted to sell. You can call or email us to get more information and even receive a free evaluation of your policy. This will help you decide if a life settlement is a good option for you.



Chris Manning 

Chris@lifestonesettlements.com

How much is my Policy Worth

By Dominic Dubs • July 18, 2022
Why should you see what your policy is worth? The way that a life settlement works is quite simple. Many people are under the assumption that life insurance is just another bill that you continue to pay like your car insurance, however your life insurance policy is actually an asset. Say you have a house, but you want to move across the country, would you just leave the house and forget about it entirely? NO. You would put it on the market to see how much it was worth. The same is true for your life insurance policy. I would recommend getting a free appraisal of your policy as frequently as a bi-annual checkup. Unfortunately, life insurance companies don’t inform their clients that this is possible because it is not in their best interest to be your fiduciary. Life Settlements are a direct hit on their bottom line. What is your policy actually worth? As I stated earlier, life settlements are actually quite simple. However, just as when you bought your policy, you will get a number that is based solely off of you personally, and not a general number. Every policy is different and has different factors involved. Luckily, when you work with a trusted life settlement company such as LifeStone Settlements, we take care of all of the paperwork, underwriting and confusing stuff for you. We make the whole process simple for you because we recognize that these steps can often seem overly complicated. When it comes to pricing of these policies, there is a cash offer that is usually tax-free to you. This offer is based off of the policy’s net death benefit, premium outlay, and your health status. These factors all contribute to what the cash offer is. For example, you could own two identical policies but the annual premium of one is half the cost. This policy with the cheaper premium would get an offer that is higher than your other identical policy. Another way to a life settlement could be beneficial to you is through utilizing a “retained death benefit.” This is when you become an irrevocable beneficiary of a specified amount, but you still sell the policy and are no longer liable for premium payments. For example, let’s say you have a $1 million policy, but you want to hold on to $150,000 to cover end of life expenses but you no longer want to pay for the high premiums that the big $1 million policy has. You could utilize the retained death benefit by becoming an irrevocable beneficiary for $150,000, while not having to make your high premium payments anymore and possibly get a cash offer as well. That is why life settlements are very important for everyone to pay attention to. Author: Dominic Dubs dominic@lifestonesettlements.com

Sell your Life Insurance in 4 easy steps

By Mark Minoogian • July 1, 2022
Sell Your Life Insurance in 4 Easy Steps Did you know that selling your Life Insurance Policy only requires four easy steps? Common reasons for selling include, rising premiums, policy terminations, term policies ending, medical expenses that require an influx of cash or if the holder simply doesn’t need it anymore. For individuals who fall into these or other categories, this may be a sensible, last option. It’s important to mention that we believe in maintaining your Life Insurance policy when possible. If they can afford it or their family needs the funds, we encourage our clients to keep their policies. Our company prides itself on offering a solution only to those who require it. If you’re interested, here are the steps to take: Get An Appraisal. Your policy is an asset, just like a car or house. And like selling your car or home, you’ll need to get an appraisal of what your policy is worth. The appraisal process consist of evaluating the cost to maintain the policy and the health status of the insured. Once your policy is appraised, we can begin fielding you cash offers for your policy. Complete Three Forms. There are three forms to get the process started. A HIPPA disclosure granting permission for our company to obtain medical records. A medical questionnaire of history and conditions as well as a life settlement application. The health of a client will be a key factor in determining the value of a policy. Healthy clients will receive lower valuations as opposed to individuals who are ill. That is pretty much it. After the evaluation period, we present our offers to the clients. In cases where there is cash surrender value in the policy, we will offer 10-30% above that surrender value. There are also instances where a client can receive a retained death benefit, which means the buyer and seller agree upon an amount that will still go to the client's family. Once a client accepts our offer, we start the process to change the policy ownership and promptly cut a check to the seller. The former policyholder will no longer be responsible for their premiums going forward and hopefully, some of their financial burdens will be relieved. If you’re interested in getting a free appraisal of your life insurance policy, contact: (954) 228-0355 or visit our website at www.lifestonesettlements.com Author: Mark Minoogian mark@lifestonesettlements.com