Q Life Settlements Blog

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October 1, 2021

Top Reasons Given for a Life Settlement

According to our clients there are four top reasons that people decide to sell their life insurance policy in a life settlement or viatical settlement:

    1. No longer can afford premiums.  Life insurance premiums can take up a large percentage of your budget and can grow over time.  These expenses are hard to justify in many situations where more important items are a higher priority.  Selling a policy not only eliminates the need to spend money on premiums but also puts cash in your hands today.
    2. Beneficiary no longer needs the funds or is no longer in the picture.  When a life insurance policy is initially put in place, it is typically to take care of a spouse, child or other loved one as a contingency in case of an untimely death.  As time passes since the policy issuance, those circumstances can change dramatically.  The contingency plan may no longer be needed – the home mortgage may be paid off or education expenses already covered.  If these contingencies no longer existed or the beneficiary is no longer in the picture, the policy may no longer be needed.
    3. Increased current expenses.  Inflation seems to be all over the news today, and it is easy to understand why.  The cost of almost everything is increasing.  Most seniors are living on a fixed income that does not seem to go as far as was expected.  Medical bills and long-term care costs can be quite expensive.  For example, according to the U.S. Health and Human Services, the average monthly cost of a private room in a nursing home is nearly $7,700.  Selling your policy eliminates a large current expense and provides valuable cash to cover increasing expenses.
    4. Term policy is expiring.  Many people do not know that most term insurance policies can be converted into a permanent life insurance policy (for example, whole life or universal life).  While term policies have no investment component or cash value, once converted into a permanent policy, that policy does grow cash value over time.  These policies are very attractive to the life settlement and viatical settlement market.  Why not get paid cash for an expiring policy that is of no value to you but is valuable in the life settlement market?

Should you sell your policy if one of these four reasons mentioned above is applicable to you?  That is a very personal question that only you can answer.  We can provide you the tools to help you make that decision.

Remember: Never abandon a life insurance policy without looking at the life settlement option first!

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