In these tough economic times people are looking for ways to make extra cash. People are now buying up life insurance polices. Basically investors are profiting from YOUR DEATH! Shocking right? Today many investors are willing to buy life insurance polices, and are willing to pay more than, you could get from surrendering it to the insurance company. These transactions are called life settlements, and more and more people are getting involved in this investment vehicle.
People sell their life insurance for many reasons. Some people feel like they don't have a need for it anymore, some people are sick and need money and some people are just looking to make a quick buck. Whatever the reason is, life settlements have become a huge business.
Life Insurance buying and selling is pretty simple to understand, here's how it works. A company such as AIG buys insurance polices from people on the behalf of investors. The investors then pay the premiums on the policy until the person dies and then collects the death benefit. Investors have been known to make huge profits on these deals, some as high as 30%. Investors used to buy polices of terminally ill patients, but now have been focusing on healthy retirees.
Should You Sell Your Policy
This is the big question on everybodies mind, its probably on your mind too. Should you sell your life insurance policy? You certainly would get more than surrendering it to the insurance company will get you. The answer is, it all depends on your circumstances. If you need cash, experts advise selling off other assets, and if there is chance that you will need life insurance in the future it might be unwise to sell it, due to the restrictions on the amount of life insurance you can get. Also there is a tax burden to deal with. When you sell your life insurance policy, you might receive a large sum of money. This means that you should expect a large tax bill coming your way. You have to evaluate the worth of your policy because for some sellers, the the tax bill ate up most of their gains from the sale of the policy.
Also keep in mind that when you die, the insurance death benefits go to your beneficiaries tax free, which is another perk to buying life insurance polices from people. In conclusion it is hard to say if it is worth selling your life insurance policy. It all depends on you and your circumstances. Investors in this business are making large amounts of money so if you do decide to sell your policy make sure you are getting the best prices you can.