How Much is the Life Insurance Policy Worth?

Life insurance policy is a necessity for everyone,and that’s why more and more people are conscious about it. However, there are cases in which you may not need your life insurance policy anymore,and you are just paying the premiums for the sake of it. You don’t really have to do that if you don’t want your life insurance policy anymore because you can sell them. Life settlement companies and providers buy your life insurance policy by paying you a fair amount which will be lesser than your death benefit amount but higher than the amount that the insurance company will pay you when you surrender your policy.

People usually put an end to their insurance policy because they no longer can afford to pay for the insurance premiums or because they are in urgent need of money. Also, if you think that your family is financially well-off by the time you retire or enter old age, you can sell your life insurance policy and invest the money in a lucrative business or market. In certain other cases, you may want to sell your life insurance policy because you need to pay for your medical expenses that your health insurance is not going to cover.

A life settlement company will assess your age, health,and the life insurance policy document before they put a price on it. You may wonder can you cash out a term life insurance policy? And how much is my life insurance policy worth? Here are a few factors that the company is going to consider before it decides the value of your policy:

Policy size

The bigger the policy or,the higher the death benefit amount is, the higher will be the value of the policy. Life settlement companies give more value to policies that are of higher value,and in fact, many such companies will have a minimum policy price which is usually around 100,000 Dollars. This varies from one life Settlement Company to another and with the whole life settlement industry growing through the years; we can hope that there will be companies which are open towards the sale of smaller policies as well.

Age and life expectancy

The older the insured, the higher the value of the policy will be. If the insured’s life expectancy is shorter, the value of the policy increases. This is because of the time within which the company or the buyer of the policy will be able to gain the death benefit. The shorter the time, the better it is for the buyer and the higher will be the price of the life settlement.

Premium amount

The lower the premium amount,the higher the value of the policy and the higher the price of the life settlement. When a life settlement provider or company buys your life insurance policy by paying you, they maintain your policy until your death in order to receive your death benefit. In such a situation, they are the ones who pay the insurance premiums,and they would value your policy more if the premium costs less.

The market rate of return

Investors will be paying more for your policy if the market rate of return is high. If the interest rate of the investments they make in the market with their business is high, they will be willing to buy more policies at higher values.

Cash value

Last but not least, your cash value determines the total value of your insurance policy to a great extent. If your policy has higher cash value, the investors will use this amount to pay the premiums for the first few terms. This means that your cash value will increase the worth of your policy and higher the cash value, better the price you will get for your policy. If you have withdrawn from your cash value and not repaid, it will affect the selling price of your policy.