Life insurance, yes that consistent midday commercial we’ve all grown used too over the years. But it really is something we should have in place particularly as we get older and have loved ones dependant on us. Now like many Americans, sometimes finances are a little short and the stress of modern day living offers the question – Should I sell my life insurance for cash whilst I’m still alive? Sounds easy huh? Mmm it’s a little more complex then that, but we’re here today to inform you of information you should know before considering this as an option.
Selling your life insurance for cash seems like a straight forward decision, although there are many factors you should consider with this option. An online search can help identify key requirements and taxable outcomes to see if this decision is something you should pursue.
What is Life Insurance and How Can I Possibly Sell It?
Life insurance is a contract between you and the insurance company. You’re essentially paying them to cover your loved ones if you pass, and they’re giving you a payout in return. When selling life insurance for cash, there are two main types of policies available for sale. The first is when the policyholder (you) sells their policy to a third party – this can often be done as an investment for someone who wants to have financial options that they don’t intend on using themselves until much later in life or never at all.
The second type of sale that can be made is if the policyholder has a “cash value” built up from regular payments they’ve been making – typically these policies will have an accelerated pay out schedule when the owner of the policy wants to withdraw the money, and they can sell it for cash. It is important to note that in both cases this is a private transaction between you and another party – so be careful to do your own research before making any final decisions.1
Is Selling Life Insurance Right For You?
If you choose to sell life insurance for cash it is best if you start your search looking online since there are a number of companies who will offer these services. However, be sure that you are dealing with a reputable and reliable broker who will provide you with the information you need. Additionally, it is important to note that some states do not allow for this type of transaction so be careful to check on your local laws.2
Another factor to consider is the age of your policy, and how much cash value it has – policies under 10 years old will likely not fetch as much as one who’s been around for a while. So its very important to not make emotional decisions when under financial stress and make sure in the long run if it truly is the right decision for you.
What Are The Benefits of Selling My Life Insurance?
1. Getting Cash: The most obvious benefit to selling life insurance for cash is getting cash. Life insurance companies tend not to generate a lot of money from your policy, so if you’re considering selling it for cash then this is the best way – especially if you’re looking to get your money out quickly.
2. Saving On Taxes: Another benefit of when you sell life insurance is that when you take out a policy that’s paid off, it won’t be taxed as income, which means you can get a lower amount on your taxes.3
3. Getting Cash Without Life Insurance: If you’re getting old and you have life insurance through your employer, it’s not too uncommon for it to be cancelled because of ‘lifestyle changes’. This is a good way of getting rid of the policy without paying out a lot of cash,
4. Free Money: Now not everyone really needs life insurance but many people do and it’s also an excellent way to save up money for retirement. If you’re a single person with no dependants perhaps having some more cash available.
What Are the Disadvantages of Selling Life Insurance For Cash?
1. Taxes: Like mentioned above, taxes can be a big disadvantage for some. For example some people don’t want to pay higher taxes simply because they’re getting rid of a policy.
2. The policy Is No Longer There: As soon as you sell your life insurance, the policy will be terminated and you won’t get any further benefits or cash value out of it.
3. Paying Out The Death Benefit: As soon as you sell your policy it will be no longer in effect. If a family member passes away without another policy in place, then all the money that was paid out at the time of death will be lost to you too.
Search Online For Options In Selling Life Insurance
If selling your life insurance for cash is something you’ve been thinking about for some time, a search online can help you identify whether or not this option is right for you. There are many qualified brokers in your localities ready to offer you competitive deals but making sure its the best benefit you will receive is much more clear when you search online and put in your unique preferences.