Life Insurance - Options When You Are Alive

Most people assume that a life insurance policy only pays out a settlement when the policyholder dies. Then again, most people in Western cultures don’t talk about death and are even less likely to plan for it. Nevertheless, you can use your life insurance in many ways whilst you’re still alive.

5 Ways to Use and Sell Life Insurance Policy - Depending on your current circumstances and health, you might need cash and sometimes life settlements are the only option. The good news is that you can easily tap into the cash value of your policy without necessarily having to sell life insurance policy, as described below:

A: Loans - Borrowing money and using the cash value of your policy as a collateral is a very common approach when trying to work out what to do with your universal life insurance. You can even borrow up to 90% of the cash value which could be in the tens of thousands or even millions of dollars. Some companies will only allow you to borrow up to the accumulated cash value though so it’s worth checking the rules. Although you should also note that this will impact the final death benefit payout.

B: Withdrawals - Some life insurance policies allow you to make withdrawals by adjusting your policy terms. Again, this assumes that you have accumulated some cash payments. Either way, it’s worth talking to your policy provider to see what’s possible before you even consider selling a life insurance policy. You might be surprised at how useful it is for you and your family today.

C: Surrender - Sadly, there’s still a lot of unknowns around life insurance. This means that when people find themselves unable to pay the premiums, they simply cancel without knowing what other options they have. Of course, surrounding your policy might be what’s best for you and your situation. If that’s the case then it essentially means that you cancel the policy with your provider. They then release all the cash value at that moment in time. Although, bear in mind that this is always going to be less than if you choose to sell life insurance policy.

D: Apply for Living Benefits - Depending on your policy, you could be eligible for a cash payout of up to 50% of the death payout if you meet certain criteria. These usually include chronic or terminal illnesses or even the need for long-term special care. Again, this could be the extra helping hand you need before deciding to sell a life insurance policy.

E: Sell Life Insurance Policy - Once you’ve explored all the other options, then a viable option might be to sell your life insurance. Of course, you should consider how this might impact your family. Either way, it’s a better strategy than surrounding your policy. The idea is that you sell your final death payout for a sum less than that but greater than your surrender value. You’ll have to work with a broker to negotiate the deal with a life settlement company that specializes in buying these types of insurances.