A lot of people wonder about the process that is involved in exchanging policy for a life settlement. It is not as much of a tough and complicated task as you would think. The whole process can be broken down to simple and easily understandable steps. Here’s how to sell your life insurance for cash.
As you plan to go for a life settlement, the very first thing involved is making an analysis of certain conditions. First of all, you have to know about the kind of life insurance policy you own. This will help you figure out if it qualifies for a life settlement or not. Apart from that, check all the other conditions, such as – the death benefit of the policy worth at least $100,000 and if you have owned the policy for as long as your state would let you get a life settlement for. Another plain condition is that you should be 65 years of age or older. When you analyze these simple things, you’d be able to find out if you qualify for a life settlement or not.
Now that you know the eligibility, the life insurance policy is ready to be sold for instant cash. For this, you need the help of a third party life settlements company or life settlement broker.
There are two types of professionals involved in this process- brokers and providers. Brokers are independent professionals who act as a mediator between you and the buyer. On the other hand, a life settlement providing company would sometimes do the same thing and sometimes is the buyer as well.
However, brokers charge an extra commission to get the task done. Look through the best of life settlement providing companies or brokers and do your research. It could be word of mouth or an internet search to list out the best life insurance settlement company. Once you choose out of a broker or a life settlement provider, you are ready to proceed to the next step.
Here, most of the work is done by the life settlement provider or broker. Whether it is the broker or a life settlement provider, they would need details about your life insurance policy and medical records to confirm that you qualify for a life settlement. Furthermore, they would also analyze these documents to estimate how much money to exchange for the policy.
It is a very important to get a privacy statement signed before you provide all the personal information to the provider or broker.
Deciding the Offer
After the life settlement provider analyzes the documents that you provide, like your life-expectancy, the death benefit value of your policy, and all the other factors; he draws inferences. These inferences further analyzed to ascertain the amount to offer as cash. Once he analyses this, the insurance provider would get your official approval.
Evaluating the offer
Once the life settlement provider or broker decides about the offer, he would introduce the offer to you and explain it to you. Once the professional completely explains, it is up to you whether you find the offer worth the exchange or not. Once you decide, you are required to report your decision to the broker/provider.
If you accept the offer, as the next step, your broker or provider will bring you a closing package- a package that contains all the necessary documents. The provider is also required to explain the significance of each document to you. As you understand the documents, you and the beneficiary of your policy have to sign the documents, making the acceptance of the offer official. Once you sign them, the provider or broker would take back the signed documents to move ahead with the process.
Transfer of ownership
As the broker or provider gets the signed documents from you, he would be sending these documents to your insurance company. This is in an effort to formally request the transfer the ownership of your policy to the buyer. Once the documents are signed and looked into by the insurance company, they are handed over to an escrow agent. An escrow agent keeps the documents safely till the time the process of the transfer of the ownership is complete.
Acknowledging the transfer of ownership
After recording the transfer of ownership, the insurance company would send a confirmation to you, your life settlement provider, and the escrow agent. As the escrow agent receives the confirmation and request, he would release the funds in the form of payment.
These are the steps that are involved in the transaction when you need money in exchange for your life insurance policy.