Calculate cash value insurance policy

Life Insurance Policy Value – Often More Than You Think

On average, when life insurance policies are sold as life settlements they generate 800% more than the cash surrender value offered by the insurance company.** That is why it is so important to calculate your life insurance value as a life settlement before deciding to what to do with it. There are a number of reasons to sell a life insurance policy through a life settlement, many of which are listed below. However, without knowing all of the options and potential life insurance value on the secondary market, seniors could be losing out on tens of thousands of dollars in a lost opportunity. Even worse, some people allow their policies to lapse without knowing their life insurance policy value. Seniors that simply stop paying insurance premiums by definition are missing out on realizing their true life insurance policy value and get nothing in return for all of the premiums they have already paid.

Value of Life Insurance Policy – Know It Before Making a Decision

Unfortunately, almost 90% of universal life insurance policies never mature into a claim because of a change in a policy holders' situation and the policy no longer meets the needs they were intended for. Life settlements allow policyholders to generate cash and unlock value from their insurance asset by realizing the true life insurance policy value. Rather than having the policy lapse or surrendered to the insurance company for a nominal amount, seniors must learn their life insurance value on the secondary market no matter what reason they have for relinquishing it. Only then will they be able to make the most well informed decision about this valuable asset.

Value of life insurance policy can be unlocked on the secondary market easily with a life settlement. The sale of a life insurance policy in a life settlement, allows the policy holder to sell their policy as if it were any other asset. The reasons for a life insurance settlement are many, but the result is the same. Cash to a policy holder for something they no longer want or need. The most important goal when one decides they no longer want or need a life insurance policy is to maximize the value of life insurance policy asset and generate as much money as possible.

Value of Life Insurance Policy – Can Be Accessed for Many Reasons

Life insurance value on secondary market may be enough to generate immediate cash for a number of personal reasons such as:

  • Divorce
  • Fund retirement
  • Debt reduction
  • Eliminate insurance premiums
  • Buy long term care insurance
  • Charitable contributions
  • Use proceeds for other investments
  • Bankruptcy - liquidation of assets
  • Bridge periods of lost income
  • Pay for new home or dream vacation
  • Purchase long term care services
  • Higher quality of life
  • Medical Expenses

Life insurance value may not match the estate needs. But the value of insurance policy can be accessed for an estate in the following scenarios.

  • Insured outlives heirs
  • Change in estate size means current policy not appropriate
  • Proceeds from life settlement used to buy new paid up policy
  • Changes in estate tax laws no longer necessitate policy
  • Pay gift taxes on current transfer of estate
  • Current policy is underperforming

Value of life insurance policy may be unlocked due to change in business ownership or key management personnel. Value of life insurance policy can be utilized for business purposes.

  • Business sale
  • Buy/sell agreement dissolved
  • Policy performance is below expectation
  • Executive leaving
  • A key man policy is no longer needed or required for loan
  • Deferred compensation payout requires policy liquidation

Learning your life insurance policy value on the secondary market is the first step in a life settlement. Seniors should fully contemplate all available options and decide what makes the most sense for their unwanted or unneeded life insurance policy. It is foolish to do anything until the full life insurance value is known for each option available to the senior. Then and only then can one determine if a life settlement is the best way to maximize the value of life insurance policy. Value of life insurance policy? Want to find out? Use our life settlement appraisal tool to learn more.

**Government Accounting Office - Report to the Special Committee on Aging, U.S. Senate July 2010

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