In today’s economic environment, we are getting more requests for information about life settlements. Here’s how they work.

Life settlements are basically a way for a consumer to sell a permanent life insurance policy that they no longer want or need to an outside organization or investor. This buyer or third party will then own insurance on your life, they will pay any remaining premiums, and they will receive the proceeds of the policy upon your death.

This process is known as a life insurance settlement. It may allow you to receive more money than if you cancelled or surrendered the policy for its cash value, but less than the face value—or death benefit—of the policy.

Crosby Insurance Group is unique in that we represent the seller of a life insurance policy if you choose to want to sell, much like a real estate agent represents you in a home sale. Naturally, the buyer will want to pay as little as possible for your policy, while we will negotiate to get you as much money as we possibly can.

You will likely have to provide insurance policy documents as well as your medical records to the potential buyer. The entity who makes an offer to purchase your life insurance policy will base their estimation of the policy’s value on a variety of factors, such as your age and health, the accumulated cash value in the policy, and the amount of premiums still due.

Obviously, policies that have higher face value are worth more because the opportunity for profit is greater. If you own a universal or whole life insurance policy or any policy with a face value over $250,000, your policy may be more attractive. But terminally ill or older people whose life circumstances have changed such that they need cash, or they no longer have dependents who will need financial support after their death may also want to consider a life settlement.

Before you make any decisions about selling your life insurance policy, you will want to consider the tax ramifications of the sale, as well as many other factors that can impact your finances as well as your privacy, as new policy owners will want to receive updates on your life and health status. It is a complex choice that requires experience and sound advice to ensure you are truly benefiting from the sale.

Please call Crosby Insurance Group at 843-310-2667 to discuss whether a life settlement might be right for you or not.