Life Settlements – Selling A Policy With Cash Value

The idea of selling a life insurance policy to raise cash is not exactly new. Known as a life settlement, the question with these sales for policy owners is often found in the proverbial details. In this article, we look at one common question, which is can you sell a policy that has a cash value.



Cash value? What is that? Insurance companies sell a bevy of different life insurance policies these days. The vast majority are these are known as term policies and they carry no cash value. Other policies, however, do. These policies are known as whole life, variable, universal and equity indexed policies although every insurance company has its own branded names. The basic premise is you pay a bit more than the amount necessary to keep the policy in force. This extra payment is then called the "cash value" and is invested per the specifics of the policy. The value can be paid out at later dates although most people simply take loans against it when they need the money in troubling times such as…now!



So, can you sell a life insurance policy that has a cash value in it? Absolutely. What about the cash value amount? The issue is usually dealt with by adjusting the price of the purchase. Let’s say, for example, I have a policy with a $50,000 cash value. I decide to sell the policy, retain a broker and get an offer of $200,000. This offer would usually be increased by the amount that can be taken out of the cash value per the policy language. In doing so, I recover the amount I would have been able to pull out if I kept the policy, to wit, I am made whole.



In summary, yes you can sell a policy with a cash value. The price will just be adjusted to account for it.



Thomas Ajava writes for LifeSettlementLifeInsurance.com - providing independent life settlement life insurance broker services to insurance policy holders.