Get To Know The Process
Selling your life insurance policy is somewhat complicated, so before you get knee-deep in the process, it helps to have a solid understanding of how it works and what to expect. Make sure you know what type of policy you have, how much coverage you have and how much cash value is in the account. Also look into the rules and regulations for selling life insurance policies in your state.
Ignite Your Life With A Life Settlement
Windhorse works directly with investors and is contracted to source policies for the largest institutional investment funds. Policy holders enjoy the benefit of leveraging Windhorses direct investor relationships, along with personalized guidance, to obtain in the highest settlement offer without any costs, fees, or obligations, with 100% transparency and confidentiality. Headquartered in Colorado, United States of America.
Accelerated Death Benefit Rider
If your policy has an accelerated death benefit rider, that could be a viable alternative to a settlement.
Accelerated death benefit riders allow a policyholder to receive cash advances against the death benefit of their life insurance. This reduces the final death benefit, but can help policyholders who are terminally ill collect cash to pay for treatments and other expenses. These riders may also be called a living benefit rider or a terminal illness benefit rider.
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How To Manually Calculate How Much Life Insurance You Need
Follow this general philosophy to find your own target coverage amount: financial obligations minus liquid assets.
Step 1: Add up the following items to calculate your financial obligations:
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Your annual salary multiplied by the number of years you want to replace that income.
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Your mortgage balance.
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Any other debts.
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Any future needs such as college fees and funeral costs.
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The cost to replace services that a stay-at-home parent provides, such as child care, if applicable.
Step 2: From that total, subtract liquid assets, such as savings, existing college funds and current life insurance policies.
The number youre left with is the amount of life insurance you need.
Alternatives To Selling Life Your Insurance
- Accelerated death benefit. Many life insurance policies have an accelerated death benefit option, sometimes called a living benefit, that pays you a part of your death benefit while youre still living. Consult with your policy details to find out if this is an option.
- Borrow against your policy. You dont have to sell your policy to access some of the cash value now. Its possible to borrow against your life insurance. To be clear, this option is a loan, and like all other loans, youll have to pay back what you borrow with interest. If you pass away before you repay the loan, the outstanding loan balance will be subtracted from the death benefit.
- Surrender your policy. You can surrender your life insurance policy by choosing to stop making premium payments. If you choose to surrender your policy, youll be paid a portion of the policys cash value. However, this surrender amount is typically lower than the cash offer presented by a life settlement.
Although these alternatives might allow you to see an influx of cash into your finances, keep in mind that a life settlement might be a more lucrative opportunity.
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Are You Saving Enough To Retire
Start by getting a realistic idea of where you stand today.
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Ways To Estimate How Much Life Insurance You Need
If you want to quickly determine your existing life insurance needs, an estimate can be an easy way to get a value. These methods are better than a random guess but often fail to account for important parts of your financial life.
Use the calculator above to get a more refined idea of how much life insurance you need, then compare that value to these estimates.
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Ready To Sell Your Term Life Policy Through A Life Settlement
Now that you know all you need to know about selling a term life policy, youre ready to explore your options. If you havent already, get started by filling out our eligibility form and see what kind of life settlement you could receive from Lighthouse Life. If you have any questions, our life settlement experts will be happy to speak with you and provide answers.
Multiply Your Annual Income By 10
The 10 times income method is the easiest way to get an estimate but also not a very good method. You take your annual income and multiply it by 10. Thats it.
So, if youre making $100,000 annually, youd multiply that by 10. Thats $1 million of suggested coverage.
But using this method could leave you wildly underinsured. It doesnt take into account many factors that should go into a life insurance calculation. Those factors include your debts, mortgage and future childrens education needs. It also ignores at-home parents, who may not have a salary but whose household contributions are critical.
If that parent dies, the family may have to pay for child care, house cleaning, and other services. The 10 times income method doesnt take that into account.
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Stay Connected With Us
As per regulatory changes, it is mandatory to submit PAN/Form 60 for your policy with immediate effect. Please update via My Account/ / OR / HDFC Life branch. Ignore if already submitted.
HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.
Registered Office: Lodha Excelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai 400 011. Tel No: 67516666.
The name/letters “HDFC” in the name/logo of the company belongs to Housing Development Finance Corporation Limited and is used by HDFC Life under an agreement entered into with HDFC Limited.
For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale.
As per regulatory changes, it is mandatory to submit PAN/Form 60 for your policy with immediate effect. Please update via My Account/ / OR / HDFC Life branch. Ignore if already submitted.
HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.
Registered Office: Lodha Excelus, 13th Floor, Apollo Mills Compound, N.M. Joshi Marg, Mahalaxmi, Mumbai 400 011. Tel No: 67516666.
The name/letters “HDFC” in the name/logo of the company belongs to Housing Development Finance Corporation Limited and is used by HDFC Life under an agreement entered into with HDFC Limited.
For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale.
How Does The Type Of Life Insurance Affect The Cash Value
It is important to understand that some types of life insurance policies may or may not include a cash value feature. Pay attention to cash value life insurance vs term, since term life insurance does not have cash value. If you are looking for a type of life insurance that may have cash value, you should be looking for:
- Whole life insurance is the most common type of fixed-rate permanent life insurance and it covers a policyholders entire life if the premiums are paid on time. There is a guaranteed minimum cash value growth.
- Universal life insurance uses market interest rates to grow cash value. It is also adjustable and you can choose the level of premium and death benefits. Just like whole life, there is a guaranteed minimum cash value growth.
- Variable universal life insurance is linked with the savings component of variable insurance policies based upon performance of an index and usually has a maximum limit and a minimum floor. The premium is flexible the same as universal life.
- Indexed universal life insurance allows you to profit from market gains in an index fund tax-free while avoiding the danger of losing money during a market downturn.
Because each type of life insurance operates based on different funds, its possible for the cash value to be calculated differently.
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What Is A Term Life Policy
Term life policies are a type of life insurance coverage that provides a death benefit to the policyowner 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 policys 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 you must undertake before you can sell a term life insurance policy.
How To Calculate How Much Life Insurance To Get
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Sell Term Life Insurance Policy Calculator
Selling a term life insurance policy is possible if your term policy is still convertible. Most term policy owners don’t realize that they can convert their term policy into a permanent policy without having to do another health exam. What happens is the carrier will use the same health rating you received when you applied for term insurance way back when, and calculate premiums based on that health rating if you were to start a new policy today.
What’s great about the conversion option is that you may have received a great health rating when you were young, but your health has since declined, perhaps even dramatically. It doesn’t matter, the carrier will honor the conversion no matter what as long as your conversion period has not expired. You can find out when your conversion privilege expires either by reviewing your original contract terms or by calling your insurance carrier and simply asking when the conversion expires.
What Are The Eligibility Requirementsfor A Life Or Viatical Settlement
Before you can determine how much your life insurance policy is worth, you need to determine whether youre eligible to sell it at all. An online life settlement calculator will ask a few basic questions to determine if you qualify for a life or viatical settlement. In general, here are the eligibility requirements that help life settlement companies determine if they can buy out your life insurance policy:
Policyholder Age
In most cases, you must be 70 years old to qualify for a life settlement. Viatical settlements may be an option for younger policyholders if they have a chronic or terminal illness.
Policy Age
Each state has their own regulations on waiting periods that determines how long you must own a life insurance policy before you can sell it through a life settlement.
Policy Value
The policy value of your life insurance will determine your eligibility. Most life settlement companies will not buy out a life insurance policy unless it has a face value of $50,000 or more.
Policy Type
There are only a few types of life insurance policies that can be sold through a life settlement. The life insurance policies are whole, universal, variable, and convertible term policies.
Life settlement calculators will ask you a series of basic questions in order to get an idea if you qualify, but to confirm eligibility youll need to submit medical records or a list of health care providers to the company youre working with.
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Where Do You Buy
Now that you know how much life insurance you need, the next question is where should you buy life insurance?
Not all policies are created equal, so you’ll want to consider the various alternatives before purchasing your life insurance policy.
A good insurance salesperson can help you find the right insurance policy tailored to your needs. Read the policy carefully so that you understand all charges for buying a new policy, terminating an existing life insurance policy, and any other related charges. The devil is in the details. It pays to be an educated consumer.
Also, make sure you assess the financial ratings of the company before buying your life insurance policy so you can be confident they will still be in business and able to pay when it is time to collect.
Times Income Plus $100000 For College
If you have children with future college needs, another option is to multiply your income by 10 and then tack on $100,000 to pay for college.
Much like the 10 times income method, simply adding $100,000 for college gives you an estimate but doesnt take into account other factors that should influence your life insurance coverage.
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Get The Right Life Cover For Your Circumstances
Theres a range of reasons that people buy life insurance, as well as a number of benefits. Weve put together guides to help answer many of your questions, so head on over to find out about life insurance and consider your particular circumstances:
Milestones in peoples lives are often reasons for them to think about getting a life insurance policy. For instance, buying a house, getting married and having a child can all make you think that you could do with some extra protection if the worst should happen.
Or you might be feeling that youve passed middle age, and you need to make some good provisions for the future. If you’re over 50, then compare our life insurance with our over 50s life cover.
You might want to make sure that your mortgage is protected if you die, or that your family have a lump sum to help them with their finances after youve gone. Whatever the reason, buying life insurance can give you peace of mind and be a cornerstone in a sensible financial plan for your loved ones futures.
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Things you need to know
If youre a UK resident aged between 18 and 70, you can apply for cover. Please see Terms and Conditions for further details about the restrictions that apply.
Your cash sum is dependent on your age, smoker status, length and type of cover and your personal circumstances at the time you apply.
Alternatives To Selling Your Life Insurance Policy
If a life settlement doesn’t seem like a good fit, one of these alternatives might be better:
- Reduce the death benefit: Some life insurers will enable policyholders to reduce their coverage level in order to make their premiums more affordable.
- Cancel a term life policy: Canceling a term life policy won’t provide any benefit to the policyholder, but it can relieve them of the obligation to make premium payments.
- Claim accelerated death benefits: Some life insurance policies have an accelerated death benefit rider that enables policyholders to tap some of the policy’s death benefit while they’re still alive if they need it to cover health expenses.
- Surrender the policy:Permanent life insurance often builds cash value. If the policyholder no longer wants to keep their coverage, they can surrender the policy and receive some of their cash value as a payout. But there can be fees associated with this.
- Take out a loan: Some permanent life insurance policies enable policyholders to take a loan from a life insurance policy, which they can choose to pay back or not. If they don’t, their death benefit is reduced.
- Use the cash value to reduce premiums: Some life insurers also enable policyholders to use some of their cash value to offset the cost of rising premiums as they age.
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