CAN A TERM POLICY BE SOLD FOR CASH? YES!

CAN A TERM POLICY BE SOLD FOR CASH?  YES!

Lisa Rehburg, Rehburg Life Settlements

When someone no longer wants or needs their life insurance policy, usually they just stop making the premium payments and drop it. But there is another option. They can sell their policy for a lump sum of cash. It is called a life insurance settlement.

The #1 type of life insurance policy that clients sell is universal life, a permanent type of policy. But, the #2 most common type of policy sold is term insurance. But, how can term policies be sold when they have an end date? 98% of the time, in order to sell a term policy, it must be convertible. “Convertible” means that the policy can be converted into a permanent type of policy, like universal life or whole life. Most term policies are convertible, but they usually have a conversion deadline. Check your policy or ask your insurance company or agent. They can tell you if the policy is still convertible and what the conversion deadline is. Each company is different, but the conversion deadline can be an age, the time on the policy, or both. Sometimes the policy is convertible until the end of the term.  If you would like to look for yourself – look for the words “conversion” privilege or option in your policy. This will tell you if your policy is convertible and will usually tell you when the deadline is. For example, I recently read a client’s policy, he was 68 years old, and the policy was convertible until age 70. Good news. But the next sentence said, or up until 10 years on the policy. He was on the policy for 14 years, so the policy was no longer convertible. The fact or data pages in the front of the policy may also list a conversion deadline. We suggest looking into selling a term policy at least 6 months prior to the conversion deadline. 

What if my policy is no longer convertible, can it still be sold? The short answer is yes. There is a possibility, but it is much more difficult.  The policy usually needs to have a longer length of time left on the term, or the client’s health must be very compromised, or both. The reason is that premiums after the term policy ends are exceedingly expensive. Therefore, it does not make sense for investor groups to purchase the policy, unless they have only a short period of time to make payments, i.e. someone’s health is significantly impaired.

The bottom line is before you drop your life insurance policy, investigate whether a life insurance settlement may make sense…even for term policies. Life settlements convert a “hidden asset” that the vast majority of clients do not know they have and generate cash for it.  Please feel free to contact us any time we may be of assistance. We appreciate the opportunity to be of service! 

Lisa Rehburg and Rehburg Life Insurance Settlements is in the Wellness Village where they have been members since July 2019.