Top 3 Reasons Why People Sell a Life Insurance Policy

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The life settlement industry has grown and transformed since it first began in the 1980’s during its viatical era. In the beginning, life settlement transactions were geared toward terminally ill policyholders who were in need of funds to support costs of treatment and costs of living. As the industry has changed throughout the years, the reasons people sell their policies has changed too. At ISC Services, while conducting their life expectancy assessment, we sometimes become aware of the reasons why people sell life insurance policies 

Selling a Term Life Insurance Policy

There are several reasons why someone with a policy would be looking into life insurance settlement options.

1. The policy is no longer needed or wanted

One of the most common reasons someone enters into a life settlement transaction is simply because they believe they no longer need life insurance, or they no longer want to pay expensive premiums. Instead of letting the policy lapse or surrendering it, policyholders will opt to sell it for cash.

2. The money used to pay premiums can be used for other purposes

For some, the desire to sell a policy comes from wanting to use the money to make a large purchase or settle debt. Instead of taking out a loan with interest, policyholders can sell their unwanted life insurance for a lump sum payment and use that money to fund their purchase(s) or pay off outstanding debts.

3. If the insured is terminally ill they may want to use the money for a celebration of life or arrange their finances in advance

As mentioned before, the beginning of the life settlement market was related to the AID epidemic and the use of viatical settlements. Insureds who were terminally ill and needed funds for treatment and living expenses sold their policies to raise money. While this is not the sole reason for life settlements anymore, they are still used by some insured with terminal illnesses. However, as medical insurance and treatments for AIDS have changed and developed over the last 30+ years, terminally ill people have sold their unwanted life insurance policies to fund family vacations, bucket list trips and other adventures, or to make sure their loved ones are in a stable place financially before their passing. 

Get Life Expectancy Data Before Entering Into a Life Settlement

As the market has changed in the past 30 years, so have the reasons for selling and the types of life settlement transactions. ISC Services helps life settlement investors determine the value of life insurance policies through data-driven, individualized life expectancy assessments. Get more information about ISC Services’ accurate, scientific life expectancy assessments and how they factor into life settlement transactions.