- What is a Term Life Policy?
Term life policies are a type of life insurance coverage that provides a death benefit to the policy owner if the insured passes away within a certain timeframe. This differs from a permanent life insurance policy, which will remain in force until the death of the insured or until the policy’s maturity date.
Often, term life insurance is a way for the primary earner in a household to ensure that if they pass away before retirement, their dependents will be taken care of financially. Many people also maintain term policies for other reasons, even long after they have retired.
The most notable drawback to term life policies is that if the policy expires while the insured is still alive, the policy pays no benefit. However, there are ways that a policyholder can gain value from an active term life policy that they no longer wish to keep.
In many cases, you can sell a term life policy through a life settlement. But, unlike pursuing a life settlement for a whole life or universal life policy, there are a few steps that must be undertaken before selling a term life insurance policy.
- Determine If Your Policy Is Convertible
When signing up for term life insurance, you may have been asked if you wanted to add a conversion rider. This rider allows you to convert a term life policy into a whole life policy. These riders may come at an extra cost, but in exchange for the increased cost you gain the ability to reclaim some of the value through a settlement or by carrying the policy through the remainder of your life.
If you don’t have a conversion rider as part of your term life policy, you’ll likely be unable to sell it through a life settlement. The exception to this rule is if you have a term policy and have an extremely serious or terminal health condition. In that case, you may still be able to sell your term life insurance policy, and should contact a life settlement provider to discuss what options you may have.
- If You Have a Conversion Rider, Read It Carefully
Most conversion riders have expiration dates. If your term life policy is nearing its end, you should take some time to review the rider itself and ensure that it is still valid.
If the rider has not expired, you have the option to convert the policy from a term policy to a permanent policy – either whole life or universal life. Converting a policy is an important decision and has financial ramifications. Make sure that you carefully review and understand your conversion rider before converting the policy, if that is the decision you make. If you have questions about your policy’s convertibility status, a specialist at a life settlement provider can explain details of the policy to you (provided you have the policy available), or can even contact your insurance carrier with you on the line to make sure you get all the answers you need.
- Your Health and Age Affect Settlement Offers
A variety of factors impact life settlement payouts, but few have greater impact than your health and age. In general, younger and healthier people receive a smaller payout from a life settlement, if they qualify at all. Most people who qualify for a life settlement are at least 65 years old (and often are 75 or older) and have experienced a change in their health since initially taking out a policy.
Traditionally, only insureds with impaired health could qualify for a life settlement. However, while most people who sell their life insurance policies do have some health conditions, healthy people can also qualify for a life settlement in some situations.
- Check to See If You Qualify for a Life Settlement Before Converting
Before making any changes to your life insurance policy, check with a top life settlement company to see if you would be able to qualify if you converted the policy. Seeing if you’re eligible for a life settlement is easy and free, and usually takes less than 5 minutes.
You can get started by filling out our eligibility form to see if you qualify, or by chatting with one of our life settlement experts with our web chat tool.
- Explore Additional Options
Before you pull the trigger on the sale of your policy, be sure to understand all your options. If you are on the healthier side, and you can afford your premiums for the foreseeable future, you may wish to hold on to the policy for the duration of the policy term or wait until you could receive a better life settlement payout.
- Have Your Policy Appraised by a Life Settlement Company
Finally, to sell your term life policy, you need to reach out to a life settlement company to receive an appraisal, also called a quote by some providers. Some companies provide up-front quotes that frequently differ significantly from the final payout. Others, like Diversified Insurance Brokers, Inc., perform a basic eligibility screening first, then provide a more accurate appraisal after asking some follow up questions. Call us today at 770-662-8510 or 800-533-5969 and ask for Jarad or Jason.