Over Age 70? What Is Your Policy Worth?

Perhaps your life insurance premium payments have recently gone up? Then again, you could simply be facing financial hardship. It happens to the best of us but if you have permanent life insurance then you have a valuable asset. One of the ways you can make this asset work for you is to sell life insurance policy even if you’re over 70. 

Checking the Value of your Policy before you Sell Life Insurance Policy

When asking yourself ‘do I sell my life insurance policy’, you might want to first work out how much money you’d actually receive. You’ll therefore need to do the following:

– Contact your life insurance company

– Review the type of policy

– Check your cash value and outstanding premium payments 

Contact your life insurance company

First and foremost, you’ll need to get all the information you can from your life insurance company when selling life insurance. This includes how long you’ve had it for. If it’s very new then you might be better off cancelling rather than choosing to sell a life insurance policy. This would give you a cash surrender value although it will probably be quite small. Regardless, most investors won’t consider buying a policy less than 2 years old. 

Review the type of policy

Another important point is that you can’t sell a term life insurance policy. You would therefore have to convert it to a permanent life insurance policy first. 

Check your cash value and outstanding premium payments 

When you sell life insurance policy for cash, investors are essentially buying your death benefit cash payout. Although, a higher cash value increases the value of your policy. Essentially, all your premium payments for your permanent life insurance policy partly contribute to a pot of money. This cash value can get substantial over time. Investors then use this to offset your future premium payments which they buy from you in a process called Life Settlement. 

When working out the value of your policy before you sell life insurance policy, you’ll need to understand your cash value. You’ll also need the number of outstanding premium payments. 

Three Types of Policy for Life Settlement 

As mentioned, if you hold a term life insurance policy then you’ll have to first convert it to one of the following life insurance policies: 

– Universal life insurance

– Whole life policy

– Variable life insurance 

Universal life insurance

This life policy is the most flexible because you can change your premium payments and their frequency as your circumstances change. Of course, that impacts your overall death benefit payout. Nevertheless, flexibility can be a huge help, especially during tough financial challenges.

Variable life policy

This is basically a universal life insurance policy. Although, the difference is that some of your cash value gets invested into stocks or mutual funds. You, therefore, earn interest but you also face some risk if the markets don’t perform. Then again, the interest earnings can help pay premium payments. 

Whole life insurance 

This permanent life insurance policy has a fixed schedule of premium payments. Your death benefit cash payout is therefore also fixed and guaranteed. 

How to Qualify for a Life Settlement

Now that you understand a bit more about how your life settlement payout is worked out, let’s have a look at the criteria you need to meet: 

– Over 70 and health status

– Policy’s face value

– Length of policy duration 

Over 70 and health status

Life settlements are worked out based on how soon investors believe they can make their money by getting your death benefit cash payout. It’s therefore the combination of your medical records and age that gives them the information they need to make their judgement call, based on your life expectancy.

The rule of thumb is people need to be over 70 to sell their life insurance policy. Then again, that’s with the assumption that you have average health. If you’re very healthy then you would need to have a very high face value, or death benefit, for your policy to be appealing to investors. After all, they don’t want to wait for 20 or sometimes even 30 years before getting their cash payout. 

If you’re less than 70 and facing a terminal illness though, you can also do a life settlement process. In that case, though, it’s called a viatical settlement but it’s basically the same concept. 

Policy’s face value

As mentioned, investors look at the balance of your health, age and death benefit cash payout to judge the value of your policy to them when you sell your life insurance. It’s worth noting that if you have a variable or universal life insurance, you might have impacted the face value of your life policy. You would do that if you borrowed against it or altered your premium payments. 

Length of policy duration 

When selling your life insurance, it’s not just the type of policy that’s important. It’s also how long you’ve had it for. Generally, you have to have had your life insurance policy for at least 2 years. That way, your cash value has had a chance to build up from your premium payments. 

Parting Words on Choosing to Sell Life Insurance Policy if you’re over 70

Doing a life settlement is usually more beneficial than simply cancelling your life insurance policy. There are of course some criteria to meet when selling your policy. Nevertheless, if you’ve had your permanent life policy for some time then it’s worth asking for quotes. Most investors will be interested in your life insurance asset so don’t be scared to ask for good quotes.