Sell My Life Insurance Policy Calculator
Welcome to Life Settlement Option, a broker solution to help policy owners get the most for their policy in a life settlement with no obligation to accept.
If you're curious about how much your life insurance policy is worth if you were to sell it, look no further and take 30 seconds to fill out the free appraisal request on this page. We'll get back to you promptly with approximate values and explain the process. If the numbers sound interesting, we can discuss the possibility of bringing your case to market and get multiple offers to find the highest bidder with no obligation to accept.
Everyone would appreciate a simple sell life insurance policy calculator, however there are multiple factors that go into determining the value of a policy and every case is truly unique, so it's not that simple. The good news is that with some basic information we can figure out an approximate range of where we think offers will come in for your life insurance policy. We take a friendly and informative approach, and can help answer the many questions you may have.
If we get offers on your policy, there's no obligation to accept. Life settlements aren't for everyone, but everyone that decides to accept a settlement is happy that they did. A great way to figuring out if a life settlement is right for you is by starting with a free appraisal using our sell life insurance policy calculator.
Life insurance is a great way to protect loved ones and debt, however if you end up living a longer life the premiums can increase, stretching your budget until you can't afford it anymore and lose the entire policy. Oftentimes people are better off selling their policy and investing their money somewhere else, or using it however they wish.
Many seniors do not have long term care insurance, and have the option to sell their life insurance policy and use the proceeds to afford the care that they need. And because they're using personal money for care, they are free to hire whoever they wish as a caregiver, be-it a family member, licensed caregiver, assisted living or nursing care facility, or hired assistant that is not licensed. Insurance plans typically only cover licensed caregivers, so you don't have that flexibility, but you do if you use the proceeds from a life settlement.
A life settlement doesn't need to be spent on care, however. You could use the proceeds to buy a vacation home, new car, remodel your kitchen, take a big vacation, or even distribute wealth while you are still living.
One way to look at life settlements is by asking yourself what could do with that money instead? Perhaps at one point you were hoping to leave a tax free inheritance, but now that you're older, your premiums cost a lot more, and you may have to pay them for years to come. If you take a settlement, not only will you have cash now, but you also are no longer obligated to pay any more premiums.
As an example let's say you have a $200k policy that costs $10k a year in premiums. An investor offers you $30k to take over the policy, which seems like a lot less than $200k, maybe even insulting at first, but you also don't have to pay the $10k for years to come. In fact, if you keep the policy and make that premium payment you will have $10k less in your savings this year, and may be paying $10k a year for many more years unless you know your days are numbered at this point. Alternatively, if you accept the $30k, in essence you will actually have $40k more in your savings right now than if you kept the policy and made another $10k payment. And $40k is not a small amount of money. Yes, it's less than $200k, but you must factor in the years of premiums left. If you live another 10 years, you will pay another $100k in premiums before the $200k death benefit is paid. When you consider having $40k more today and another $10k the following year and the years after that you would have spent, really the $30k settlement starts to become a lot bigger in theory. If you get hit by a bus next month, that's a different story, but also extremely rare. If you've made it this long, the chances of a freak accident ending your life early at this point is very unlikely, and the investor knows this. That's why they're offering $30k instead of say $100k.
The $10k that you were spending on premiums may have been making your budget a bit tight. The roof needs replacement, the car needs work, the yard needs help, the hot water heater is old, the market took a dip, your retirement savings are getting smaller and smaller, and on and on and on. Again, if you know your days are numbered, by all means keep the policy. For the rest of us, $10k a year is lot to spend for a $200k policy and you may be better off getting out of the contract, getting cash now, and spending or investing that money elsewhere.
If you're wondering who we are, Life Settlement Option is a life settlement broker solution that represents the seller of the policy in a transaction, and our job is to help you understand the market, represent your case in the marketplace, and negotiate on your behalf. We work with many different investors to create this option for you and negotiate for the best offer, so we have your best interest in mind throughout the process.
If you want to learn more about what goes into the valuation of your policy, other things to consider is that the life settlement market is in fact a marketplace, so a bid on a policy can go up or down depending on what other options investors have at that time, which is why it's so valuable to work with a life settlement broker. We also typically need to run an illustration the way investors want to see it as your current premium may not reflect future premiums.
While no organization could possibly build an accurate sell my life insurance policy calculator using just basic information, the next best thing would be a free appraisal with no obligation, which you can get by filling out the free appraisal form on this page.
If you're just trying to get a feel for values, here's some basic guidelines:
Someone who has a 2 - 5 year life expectancy might receive 40% - 70% of their death benefit
Someone with a 10 year life expectancy may receive approximately 10% - 20% of their death benefit, depending on how big their premiums are
Smaller policies in the $100k - $200k range often only get $5k - $10k when someone is in their 70s and has average health, which is still worth it if you're not planning on keeping the policy. If they have serious health issues these numbers can go up quite a bit
Here's a basic overview of how they're coming up with those numbers:
An investor is going to multiply your annual premium by how many years they believe you are likely to live. This underwriting is done only using your medical records, so there is no interview or medical exam. If your level premium is $10k a year, and they expect you'll live another 10 years, that's $100k they will likely have to pay in premiums to keep the policy in-force, and they need to make 8% - 12% annual interest on that money for it to be profitable
The investor also needs to factor in the settlement amount and closing costs, and interest on that money as well
If the death benefit leaves enough room to make their money back plus interest, they will start bidding, typically with some room to go up
Sell Term Life Insurance Policy Calculator
Selling a term life insurance policy is possible if your term policy is still convertible. Most term policy owners don't realize that they can convert their term policy into a permanent policy without having to do another heath exam. What happens is the carrier will use the same health rating you received when you applied for term insurance way back when, and calculate premiums based on that health rating if you were to start a new policy today.
What's great about the conversion option is that you may have received a great health rating when you were young, but your health has since declined, perhaps even dramatically. It doesn't matter, the carrier will honor the conversion no matter what as long as your conversion period has not expired. You can find out when your conversion privilege expires either by reviewing your original contract terms or by calling your insurance carrier and simply asking when the conversion expires.
You don't want to convert your policy before selling it. As life settlement brokers, we will help you order the conversion illustration the way investors want it, and will use that illustration to present to buyers. We don't need the contract in-force just yet as we already know the policy will be issued if we move forward. Assuming there's more than a few weeks left on your conversion period, typically we would sell the term policy and the investor will convert the policy once they are the owners. If we're down to the last few days of the conversion period, we will go ahead and submit the application for the conversion but hold off on making the first premium until terms are set with a buyer.
In terms of a sell term life insurance policy calculator, go ahead and fill out the information you have in the free appraisal request. We won't know the future premiums on the conversion until we run the illustration, but the first step is really talking through your case, finding out if your policy is still convertible, and then ordering an illustration. Without knowing your premiums, they might be $10k a year or $50k a year, we won't know until see it, but we can make a rough estimate based on experience and still provide you with an approximate value.
Selling a term policy generally limits candidates to the ages of 65 - 75. Some term policies have a conversion period that expires at the end of the term while others identify a certain age. For the most part, it's unlikely that an 85 year old will still have a conversion privilege on their term policy. The age of 65 or 70 is generally the cusp of age where people get offers for their policy unless they are fairly unhealthy. This is because a 65 yr old in good health could easily live another 30 years, which is long period of time for an investment. The investor is looking to make back a modest annual percentage rate for the money they are putting up-front. If they only need to wait 2 years to get their money back, there's not a whole lot of interest accumulated in that time, but 20 years and it compounds from a little to a lot. With this being the case, a lot of term policies sold in the life settlement market get offers in the range of $10k - $20k, and for a lot of people who were just going to let their policy go, this is a significant amount of money back that they weren't expecting and are happy to take it. I know I'd be grateful if I found out a worthless piece of paper or even a collectible was suddenly worth $10k. The $10k could afford a very nice vacation, some important car or home repairs, or possibly even a contribution towards a family member's college fund, first home, etc. If you get stuck on the idea that the investor is going to get rich off you, you're not taking into account the expensive premiums the investor will likely be paying for many years to come.
When people are looking at a $10k offer sometimes they feel like the investor is just trying to rip them off, and that's because people tend to look only at the death benefit and not what it costs in premiums before that death benefit is paid. For example, if a $500k term policy is converted and costs $30k a year in premiums, and the insured is likely to live another 10 years, that will cost $300k in future premiums before the death benefit is paid. In that scenario the investor makes a pretty good profit on the back end, but over 10 years they have to put up a lot of money before they get anything back, and need to make compounding interest on the settlement they paid plus the premiums they pay for it to make sense, just as the bank needs to make interest on your home in order for them to loan you all that money for 30 years. In this exampe, perhaps buyers will offer $25k - $50k, and end up with $150k in net profit from a 10 year investment. This is not a crazy amount of profit, especially when home values in the real estate market can jump that much in just a couple years.
Life settlements require that the insured is at least 65 years of age or has been diagnosed with a terminal illness, and the death benefit of the policy has a minimum of $100,000.
A great place to get started would be to find out an approximate value of your policy. Complete the free appraisal request form on this page to find out, or give us a call at 213.784.1481
Your health status, age, life expectancy, cost of insurance, and cash value in the policy will all be considered in the appraisal of your policy. Term, Universal Life and Whole Life policies are the most common types of policies that are purchased in life settlements, however 2nd to Die policies are also common. To sell a Term Policy it must still be convertible. The conversion deadline is typically the end of the term or by a certain age. This conversion deadline can be found in your policy contract or by calling your insurance company.
We've handled many life settlement cases over the years, and have had success finding offers on cases where other brokers couldn't. Our goal is to find you the highest bidder for your life insurance policy, and if you're not happy with it you do not have to accept. The value of your life insurance policy has a lot of factors to consider, and each individual case is unique.
Life settlements require some time to close, so if you're considering the life settlement option, get started today by submitting your details in our free appraisal form, and we'll help you determine if your policy qualifies and what your policy might be worth if we bring it to market.