Evan’s Note: I have discussed various uses for life insurance, but came across this topic from a view I am rarely involved with.
The uncertainty of the stock market over the past several years has done more than diminish the savings and investments of consumers – it has, in fact, led to a substantial amount of debt. In order to make ends meet, an unprecedented number of consumers have turned to credit cards, home equity loans, and other sources just to pay everyday living expenses – a particularly expensive way to go for those who are retired or who are soon approaching retirement.
In doing so, many concerned consumers have racked their brains trying to come up with solutions to get out of debt and get back on track. Unfortunately, many have come up short, continuing to dig even deeper holes of financial obligation.
Life Insurance – The Hidden Solution
When searching for ways to eliminate debt, there may be one place that retirees and pre-retirees have neglected to look for relief – their life insurance policies. Although many people are unaware that they can sell their unneeded policies for cash through a process called a life settlement, these transactions could essentially provide an ideal method of freeing up additional cash for paying off debt, as well as funding other expenses such as medical bills, long-term care costs, and even taking a much needed vacation.
A life settlement is actually defined as the sale of an existing life insurance policy to a third party purchaser for an amount that is less than its net death benefit, yet more – sometimes, considerably more – than the amount of the policy’s cash surrender value.
These transactions allow older individuals – typically those who are age 70 and over – to sell life insurance policies that they currently own, but that they no longer need or want, for an amount that is usually much more than the policy’s current cash surrender value.
In some cases, the sale price of a policy through a life settlement can be 2-4 times the amount of the cash value – which makes a great case for not simply calling your insurer and canceling your policy directly.
There is even a life settlement market for term life insurance policies – those that have no cash value build up – so it pays to check with a life settlement company first before letting your policy lapse or automatically cancelling it. They have a great customer service and their process are faster than most!
This can provide a great way to receive an influx of cash to pay off debt. In addition, if the policy still requires you to pay regular premiums, selling it through a life settlement can also relieve you of an unwanted and unneeded payment to the insurance company.
How Long Does It Take to Receive Your Cash?
Most life settlement transactions will typically take between 16 and 20 weeks from the time a policy holder applies to sell his or her policy until they receive their funds. Recently, however, some life settlement companies like HarvestACS.com have been able to speed up the process considerably to between an average of 8 and 12 weeks total.