Alternatives To Lapsing A Life Insurance Policy

September 9, 2015 | By Adam Lippman

bridge spanning over a riverLife insurance is an important financial planning tool. It’s also flexible and useful in many different situations and scenarios. In fact, there are all sorts of reasons why people purchase life insurance in the first place. On the flip side, there are also many valid reasons why most people end up lapsing that same exact life insurance at some point down the road.

However, using a modern outlook on financial planning, there are also many alternatives to lapsing a life insurance policy that policy owners and their families should consider when faced with changing needs. Some of these alternative are relatively recent options that weren’t available decades ago, and some of them have been around since the dawn of life insurance. Some fit a wide range of scenarios and others are only the proper solution in certain cases. Nonetheless, a simple review of your situation can often yield value for you and your family that no one realized was available.

 
  • Utilizing any cash surrender value to cover premium payments
  • Exploring riders on the policy including accelerated death benefits
  • Reducing the face amount of the policy
  • Transferring the policy to a family member
  • Applying for a premium waiver
  • Donating a policy
  • Taking a loan against the policy
  • Selling a policy for cash, reduced paid-up death benefit, or other options

 

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