When it comes to selling your life insurance policy, many life settlement companies will offer you a payout in exchange for the death benefit. But how much is a life settlement worth when you sell your policy? It depends on several factors: What is your age? What type of policy do you have? How healthy are you?
If you qualify, you can get a large lump sum for your life insurance policy. And if you’re searching for “life settlement broker near me,” you’re in luck! Life Settlement Advisors can help you get the most out of your life insurance policy. In this blog, we’re going to explain what you should expect from your life settlement and what is a typical life settlement payout for your policy.
How Much Can You Get From a Life Settlement?
In most cases, the payout from a life settlement will be between 10% and 25% of the policy’s face value. For example, if you have a $500,000 life insurance policy, your average payout will be around $100,000. Again, this amount changes based on different factors, like the life expectancy of the policyholder. Of course, your age and health, as well as the type of insurance and the amount of time that has passed since the policy was purchased, can all have an impact on the payout amount.
Why Do Life Settlements Pay Less Than the Policy Amount?
To put it simply, you’ll get the cash you need before your passing and a buyer will receive the payout from your insurance company. When your policy is purchased, you won’t receive the full payout from your death benefit. Why is that? The sum you receive for selling it will depend on your age, the value of your benefits, and the other conditions we discuss below.
What’s In It for You?
When you sell your life insurance policy, you can use that money toward whatever you and your family need right now, whether it’s medical expenses, a rise in the cost of living, or virtually anything. What’s better is typically you’ll receive more money than if you were to surrender your insurance policy.
What’s In It for Them?
The point of selling your life insurance policy to a buyer is for them to receive your final death benefit—i.e., the total dollar amount of your policy. Ultimately, what they expect is that they’ll receive a higher payout from your life insurance policy than they pay you.
Can I Get a Life Settlement? How Do I Qualify?
There are several requirements—like age and the type of life insurance policy you have—that determine eligibility for a life settlement. For example, companies that buy term life insurance policies will have more restrictions on qualification, because those life insurance policies expire. In fact, term life insurance will not payout if the policyholder is still alive before the benefits end. For that reason, most life settlement companies only purchase convertible term life insurance policies. However, those that have permanent policies—like whole or universal—are more likely to be eligible for a life settlement.
To determine whether or not you qualify for a life settlement with your policy, you should use tools like a life settlement calculator, like the one provided by Life Settlement Advisors. You’ll be asked to disclose your:
- Current age
- Current health status
- Type of insurance policy
- Cash surrender value of policy
- Death benefit amount
The minimum age to qualify is 65 years old and your policy should be at least $100,000. Most of the time, an investor will buy a life settlement with the expectation that the original policyholder will have a shorter life expectancy than healthier applicants. If you meet the minimum requirements, it’s still not guaranteed you’ll qualify for a life settlement.
With all of these calculations, a life settlement advisor will be able to answer your questions, like “How much can I sell my term life insurance policy for?” Ultimately, you’ll know if you qualify once you fill out the calculator and your application is examined by a life settlement professional.
Receive Your Payout with Life Settlement Advisors
If you’re interested in selling your life insurance policy, Life Settlement Advisors can help! Instead of surrendering life insurance policies that no longer serve a purpose, you can sell them for a lump sum. Start enjoying the benefits right away with LSA!
