It's All About Timing: When Should You Sell Your Life Insurance Policy?

Green Settlements Staff

Table of Contents:

  1. One of the most crucial factors affecting your life settlement payout is your age.
  2. Seniors with no beneficiaries or dependents have a lot to gain from a life settlement.

Thanks to advancements in modern medicine, people are living longer than ever before. In fact, the United States alone is home to almost 72,000 centenarians (people who live to the age of 100 or older). Enhanced longevity is generally perceived as a positive phenomenon, but it also comes with a handful of downsides.

The most immediately apparent impact is the one it can have on your wallet— just because you may live longer doesn’t necessarily mean you’ll be able to remain part of the workforce longer. For example, if you’re like many adults, you could choose to retire early and call it quits by the age of 62. If you end up living to be 100, you’ll need enough savings to support yourself for another 38 years, which is longer than some people work over the course of their lifetimes.

With limited options for generating fresh funds, many seniors are turning to the life settlement industry to regain financial stability. Eligible life insurance policyholders who no longer wish to maintain their policies can sell them for a lump sum payment known as a life settlement. These settlements can help seniors accomplish a number of things, such as pad out their retirement savings, pay for day-to-day necessities, cover the cost of medical care or assisted living, or even fund a grandchild’s college education.

But how do you know when it’s the right time to sell? At what point does your policy reach its highest payout potential? Although there are many individual factors that play a role in determining your policy’s bottom line, it’s important to understand the criteria that not only qualify you for a life settlement, but that promise the biggest returns.

One of the most crucial factors affecting your life settlement payout is your age.

In most cases, you must be at least 65 years old to be eligible for a life settlement. Though you may qualify by your mid-60s, evidence shows that older policyholders stand to receive a higher payment for their insurance policies than younger sellers. Because your age, or life stage, goes hand in hand with your health, prospective buyers may also be interested in the status of your overall health and wellbeing. Be prepared to answer a few standard medical questions or submit a form or two, similar to the information you provided to your insurance carrier when you first purchased the policy.

Seniors with no beneficiaries or dependents have a lot to gain from a life settlement.

As you age, various circumstances will inevitably change—your health will have its ups and downs, you may have to adjust your living situation, or you could even lose a spouse. If your children are financially independent and there’s no one to claim your death benefit, it could be beneficial to pursue a life settlement.

In the end, selling your life insurance policy is almost always more financially advantageous than letting the policy lapse, or surrendering it back to your insurer. A study by the London Business School found people who sold their unwanted life insurance policies received, on average, up to four times the amount they would have received if they had surrendered the life policy to their insurance carriers.

If you are at least 65 and own a term, whole or universal life policy worth at least $100,000, you could qualify for a life-changing life settlement. Get an easy, no-obligation quote today.

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