4 Reasons to Sell your Life Insurance Policy

Have you ever found yourself wondering whether or not you can sell your life insurance policy? The answer is "yes." Some people don't know that an insurance policy is considered property and, as such, can be bought and sold.

When a policy is sold, the term used to describe this action is usually "life insurance settlement." When the owner of the policy officially sells it, all the rights and responsibilities are transferred over to the new owner. That person is then responsible for making all of the premium payments until the insured person dies. When that happens, the beneficiary collects the full benefit amount.

But why would a person sell their life insurance policy in the first place? Some may think that it defeats the purpose of the endeavor, but there are many good reasons that people decide to sell. Here are some of the most common reasons explained:

To Pay for Medical Expenses – Many seniors live on fixed incomes and rising healthcare costs can create a financial burden. Often, Medicare doesn't cover all of the expenses, leaving seniors responsible for paying the difference -- something they may not be able to afford. Selling their life insurance policies in exchange for cash offers seniors (as well as people who have been diagnosed with illnesses) the opportunity to pay their medical debts and lessen the financial stress in their lives.

Policy is in Danger of Lapsing – If a person missed payments (and will be unlikely to manage them in the future) and the policy is in danger of lapsing, then selling the life insurance is a good option. After all, if the policy lapses, the owner walks away with nothing. It's better to just sell the life insurance policy and get something out of the deal.

Premium Payments are no Longer Affordable – Sometimes people's financial situations change -- people lose jobs, property taxes go up, seniors may lose some income, etc. In these cases, policy holders may no longer be able to afford to pay the premium, and selling the insurance may be the best course of action.

To Provide a Monetary Gift to Family Members or Charity – Sometimes people choose to sell their life insurance policies simply because they want to give money to family or charities while they are still living.

In these tough economic times, asking yourself the question "can I sell my life insurance policy?" doesn't seem like such an unreasonable thing to do. It's a great way to make money to pay down debt, and to unload excess stress and anxiety.