Life insurance is considered a safe backup to have in place in the event of your passing, assuring that your loved ones are taken care of after you leave this earth. However, your life insurance can actually act as a financial saving grace while you are still here. In fact, there are multiple options out there for policyholders who are looking to sell off their life insurance policy for quick monetary gain, be it to handle medical expenses or even, in some cases, personal loans.
A life settlement is the sale of your life insurance policy, with the assistance of a licensed broker, for a one-time cash payment. Investors purchase your life insurance on the secondary market from a licensed provider, with the buyer getting the policy’s death benefit upon your passing. Life settlement companies will charge a fee, which means that while you will not receive the policy’s full worth in a lump-sum payment, you will still have full access to the funds following life settlement regulations. A life settlement can occur at any time as a means of cashing in on a policy to cover sizable debt or medical bills, regardless of a person’s age or financial situation.
Also, life settlements are an option for policyholders who no longer can afford to pay the premium on their insurance policy. This relieves you of any monthly payments of those insurance premiums, and that lump sum will likely become a larger payout than what you’d get for just canceling or surrendering the insurance plan. For instance, if you get diagnosed with a terminal illness and need to pay for treatment, you could sell your life insurance policy and use the cash as part of a financial plan.
A viatical settlement falls under the same umbrella like a life settlement. However, it is specifically aligned to terminally ill patients with life-ending medical conditions. A policy owner can work with a viatical settlement broker to sell a life insurance policy to a third party for more than the plan’s surrender value but less than its net death benefit. This includes brokers like American Life Fund viatical settlements. This financial assistance can pay off medical bills and experimental treatments for life-threatening illnesses and new medications. Viatical settlements are seen as a form of compassion and can even be utilized to leave family members with financial peace of mind before you leave them. Viatical settlement companies allow you to use the money towards a vacation, covering home care costs, or even relieving credit card debt or student loans. In fact, they have no interest in how you spend it. Once the transaction has taken place, there doesn’t even need to be any further contact with them, and you can move on.
If you take out a loan for renovating your home, the viatical settlement process will allow you to cover costs of home repairs, paying off that home improvement loan immediately. It’s also the best way to cover the outstanding balance on any forthcoming home projects that will boost property value or cover future home improvement or renovation.
Among the alternatives of a life settlement or a viatical settlement is opening a tax-advantaged retirement account. These accounts, like a Roth IRA, have a high rate of return for financial help. Unlike life settlements, you won’t pay taxes on the payout of that life insurance policy anytime you withdraw upon retirement. Roth IRAs are among financial resources that let you invest long term for retirement without paying income tax when you withdraw. Roth IRAs are a financial option for anyone who has earned income from an employer. Be sure to consult with a tax advisor before working with a broker to create your Roth IRA to ensure qualifications are met.