Can I Sell My Life Insurance Policy? The Surprising Answer

When you bought life insurance, chances are good that you expected it to be many long years before your policy became relevant. Most people buy life insurance when they are healthy and have little expectation of dying. The payout of the policy then becomes a "dormant" asset, a chunk of money that may eventually be accessible to your family, and which you are paying for every month, but which you cannot do anything with. For most people, this is not an issue and it's something they don't think about—you'd probably never wonder whether it's possible to sell your policy.

However, if you find out you have a life-threatening illness, you may suddenly view your life insurance very differently. Suddenly, insurance money that no one can touch until after you are gone may not seem like such a reassuring thought. With major terminal illnesses come medical bills, often massive ones that could put you and your family deep in debt. During these times, you may also be asked to make difficult decisions—potentially even denied treatment that you cannot pay for. These costs can dwarf the funeral expenses and other costs you expected your life insurance to pay for.

It's at this time that people begin to seriously ask "can I sell my life insurance policy?"

Many people are surprised to find that the answer is yes. There are specialized insurance trading companies that can purchase a life insurance policy from you. This is not the same thing as canceling a policy or asking for an early payout; instead, it is known as a viatical settlement.

When you sell your insurance policy, you will be paid a lump sum equal to a fixed portion of the eventual policy value. This money is yours immediately to use as you see fit: it can help offset medical bills, or it can help you transform the quality of your care and day-to-day life. It may even be used to achieve a longstanding life dream. There are no limits or restrictions on how you use the profit from your sale. The company that purchases your insurance policy will take over paying the premiums, and will become the policy beneficiary.

Obviously, this represents a trade-off. When you sell your policy your relatives will no longer receive money to help with expenses after you pass. On the other hand, if a life threatening illness has made expenses today much greater than expenses tomorrow, it's often worth it. Contact us at Asset Funding Corporation today and see if you qualify!

How to Sell a Life Insurance Policy

At some point in time or another, many people are approached about purchasing life insurance policies. Most opt to get them because they want to make sure that their families remain financially stable after their death. However, if life hits you with a life-threatening illness, selling your insurance policy may be all that stands between you and crippling debt or worse.

After all, when you face an illness, there are many factors to consider. Ask yourself the following questions:

• Will you need extensive treatment to combat the disease? 
• Will you require any expensive medications? 
• Will you need a wheelchair, a handicap-friendly vehicle or any other equipment?

• How much will your insurance pay for? 
• Will you be able to work with the illness?
• If not, will this affect your ability to handle normal expenses (e.g. groceries, car payments, mortgage payments, etc.)?

If the answers to these questions have you in a panic, you should consider the possibility of selling your insurance policy. Here are a few of the steps that you will need to take in order to do so.

Have the policy appraised.  This will tell you the value of the policy and what it will sell for. While some people will claim that you aren't getting your money's worth by selling ahead of time, the reality is that you are surrendering the policy for a much higher rate than the cash value that you would receive from the insurance company. If you have an illness that entails a lot of expenses, chances are you would run out of money and let the policy lapse anyway. At least this way you get a significant amount of money for it.

Locate a buyer.  Once you know the value of the policy, it’s time to find a buyer. This is the person (or company) that will take over the monthly premiums of the policy and become the benefactor when you, the original owner, pass. It is important to note that when you sell your policy you are not cancelling it -- you are simply switching who owns the policy and who will be responsible for maintaining the payments. 

Talk to someone.  Since selling a life insurance policy is a huge financial decision, it is important for you to talk to a financial advisor or other expert about it. An expert will help you determine whether this is the right course of action for you, so that you can confidently say, “I am going to sell my life insurance policy.” Also, it is important to talk to your family about the decision and so that they understand why you are selling your policy and what it means for them. Your family will undoubtedly be supportive of any decision that helps you get treatment and live a comfortable life.