Even though life settlement is more popular than ever, many people are still avoiding this. With so many myths surrounding these financial transactions, there is no wondering why.
The following life settlement myths have killed many deals, and continue to scare people away:
- I have to be terminally ill to qualify for life settlement. This is not the case in any way, shape, or form. In fact, life settlement is for those who are healthy. There is a separate transaction, known as a viatical settlement, for those who are terminally ill.
Generally speaking, a life settlement is available to healthy individuals over the age of 65 who are interested in selling a whole life, term, or universal policy. As your age increases so does your life settlement amount – this has nothing to do with your health.
It is better to take the cash surrender value. This is one of the most common myths. Most people who do this are not aware of all their options, so they simply do what is easiest. In many cases, selling your policy will net you much more money than surrendering the policy. At the very least, it makes sense to compare both options to see which one will benefit you the most.
I can’t afford my life insurance so it is best to let the policy lapse. Did you know that more than 80 percent of insurance policies lapse? With this, nobody is the winner – except the insurance company. While your case may not allow for it, you should at least consider life settlement. You may find that this allows you to receive money, whereas you were initially just going to walk away.
I don’t have a whole life policy so I am not eligible. For whatever reason, many people believe that only whole life policies can be sold. This is definitely not the case. Life settlement is available for many types of policies including whole life, term, and universal. Don’t believe the myth that only whole life policies can be sold.
Life settlement is only for those with a high net worth. This myth has been circulating for many years, and has no truth to it. In the past, only high net worth individuals were taking advantage of life settlement. This was the case because they were the only group aware of the benefits. Now, more people realize the advantages and are considering what it can do for them. In most cases, life settlements are available to anybody over the age of 65 with a policy worth more than $100k.
The process is impossible to figure out. There is no denying that a life settlement transaction is complex. That being said, many people sell their policy every year. Remember, you won’t be alone. The company buying your policy or a broker can walk you through the process.
Now that these life settlement myths have been debunked, you can decide if selling your policy is a good idea for you.