Life settlements are identified as one of the most amazing ways to receive instant cash right after selling the insurance policy. Whether you’re in dire need of cash, you have a debt to pay off, your pocket is going too short to pay insurance premiums, or you want to go on a nice vacation, a life settlement can prove to be one of the finest options available. Once the life settlement provider is done going through your policy and examining your medical records, he approaches you with an offer.
Although, certain criteria are needed to be met so that you become eligible for a life settlement. Once you meet all these criteria, you can sell your life insurance policy at ease. Below is the list of all the criteria that will mark as a gateway to get a life settlement:
- Type of policy-
This is the very first criterion that decides whether you’ll be able to get a life settlement from your life insurance policy or not. The first thing you need to find out is whether your life insurance policy is a universal life policy, convertible term policy or whole life policy. Permanent policies and convertible term policies that fall under group policies can also make their way to a life settlement. However, standard term policies and premium financed policies can’t help you get a life settlement.
- Life expectancy-
This is another important factor that determines your chances of getting a life settlement. Unlike viatical settlements, life settlements require more than 2 years of life expectancy. However, life settlements will be more valuable if the life expectancy of the seller is lesser.
While considering a life settlement, age is one of the major factors as it has a greater impact on the sum of money you would get during this transaction. Policyholders who are 65 years old or above fall under the criteria where they can sell their policies. The more obvious thing about it’s that the buyer gets the benefit from the policy only upon the death of the seller.
Another important aspect about this factor is when the life expectancy of the policyholder is low; the amount of money to be paid by the buyer for premiums would be less.
- Policy value-
Life settlement brokers and providers are especially concerned about the value of a policy. To be eligible for a life settlement, a policy must have a death benefit of a minimum of $100,000. The investors usually look for bigger policies. This is why the policies with a value lower than what is mentioned above, are excluded by the providers right away. Since the life settlement industry is growing, the policy’s minimum value is more likely to come down in the later years.
- Age of the policy-
This is also one of the criteria on which your eligibility for getting a life settlement depends but the minimum policy period varies from state to state. If you want to sell your policy, the first thin a life settlement provider will check the time you have owned the policy for. Every state has defined its own time for which you should own the policy before making any move. Although you may witness exceptions like the death of the spouse, divorce or retirement still, it will depend solely on the state that you belong to.
Once you’re eligible to get life settlement and the life settlement providers or life insurance settlement brokers come with an offer, make sure that you stay cautious until it’s done.