What Is My Policy Worth in a Life Settlement?

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How Much Is My Life Insurance Policy Worth?

With a Life Settlement, you can receive a one-time lump sum payment from the buyer when you sell your life insurance policy. While a Life Settlement does not give you the same amount as the full benefit would, you will exceed the cash value of your policy. Settlement Benefits Association can help you determine how much your life insurance policy is worth to buyers.

Before deciding to sell your policy, you want to know how much it might be worth based on your situation. First, it is important to understand the eligibility requirements for Life Settlements and the factors that may affect your payout.

Do I Qualify for a Life Settlement?

To qualify for a Life Settlement, you must meet certain criteria. The eligibility requirements include:

  • The policy owner must be 65 years old or older.
  • The settlement must apply to a settlement-eligible policy.
  • The policy’s full benefit should be $100,000 or more.

Depending on your state, you may need to meet other eligibility requirements, such as having contributed premium payments for a certain amount of time ‚ÄĒ usually between two and five years.

Older couple celebrating their life settlement

Do I Qualify for a Viatical Settlement?

You may qualify for a Viatical Settlement instead of a Life Settlement. The Viatical Settlement process is similar. However, the policy owner must:

  • Have a terminal illness diagnosis.
  • Have a life expectancy of fewer¬†than four years.
  • Meet any other state requirements

What Factors Determine the Value of My Life Insurance Policy?

At Settlement Benefits Association, we gather detailed projections from your insurance carrier to analyze the value of your policy. We also determine the best way to present your policy to buyers to maximize its value. 

We present the case to licensed institutional buyers, providing them with all relevant information about the policy and the policy owner so they can make an informed decision.

Next, we negotiate with each buyer. The individual negotiations help to drive up the price of your policy by increasing demand. After several rounds of negotiations, solicitations, and response, we should arrive at the highest price possible.

At Settlement Benefits Association, we work with more than 20 licensed funding groups that have worked in this industry for years. We have fostered excellent working relationships and trust that these groups will give you the best deal based on your policy.

Policy Type

Only certain types of life insurance policies can qualify for a Life Settlement. Most whole or universal policies and term life insurance will qualify. Other types of policies, like group policies, should be judged on a case-by-case basis.

Benefit

While factors such as¬†life¬†expectancy and cash value can cause significant variances in your settlement amount, your policy’s benefit often gives interested parties an idea of where to start in their policy bidding.¬†The¬†higher the benefit, the higher your settlement payout. However, potential buyers will also consider¬†the cost of premium payments.

The length of time you have paid your premiums makes a difference. If you have paid a lot on your policy over the years, your policy may cost less to maintain, further enhancing its benefits to a buyer.

Life Expectancy

Life expectancy at the time of your settlement is one of the largest determining factors for your settlement amount. If you are not ill and do not have an impaired life expectancy, potential buyers will look at a few factors to estimate it:

  • Age:¬†Many people aim to wait until they¬†are over age 70 to¬†apply for¬†Life Settlements.¬†You must be at least 65 to qualify for a settlement with Settlement Benefits Association.
  • Medical history:¬†When you decide on a¬†Life Settlement, we will collect your medical records.¬†Buyers want to see if you have any elevated levels or a family history of certain¬†illnesses.
  • Lifestyle:¬†Certain lifestyle choices and¬†risk factors can shorten your life expectancy.

If potential buyers think your life expectancy could be relatively short, they will pay less in premiums and get your benefit sooner, making your policy worth more. 

Frequently Asked Questions (FAQs)

The average payout for a policy owner can range from 10% to 25% of the death benefit or more since every case differs. Life Settlements generally pay several times more than owners can get by surrendering their policy to the carrier.

The best way to maximize your policy’s value is to work with an established broker like Settlement Benefits Association. Our team has decades-long relationships with many reputable funding groups. The industry experience we boast allows us to present your policy in the best light and generate competition among bidders. Doing so increases demand and enables us to negotiate higher offers.

Calculate the Value of Your Life Insurance Policy

The first step in calculating the value of your life insurance policy is to contact Settlement Benefits Association. We will discuss your options and help you determine whether a Life Settlement or Viatical Settlement is viable and makes sense for your situation. Then, you can complete a preliminary life insurance appraisal request.

Contact us today for a free policy evaluation.

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