A chronic illness can create financial challenges, especially when it affects your ability to work or increases your medical expenses. If you own a life insurance policy, you may be able to sell it for a lump sum of cash through a life settlement, giving you access to funds to cover medical bills, living expenses, or other financial needs. Understanding how to get a life settlement when you’re chronically ill can help you access the hidden value in an existing life insurance policy.
What Is a Life Settlement?
A life settlement is the sale of an existing life insurance policy to a third-party investor in exchange for a cash payout. The buyer takes over premium payments and receives the death benefit when the insured passes away. This option allows policyholders to convert their life insurance into immediate funds, which can be especially beneficial for individuals with chronic illnesses who need financial relief.
Can You Qualify for a Life Settlement with a Chronic Illness?
Life settlements are typically available to individuals who:
- Have a permanent or term life insurance policy with a death benefit of at least $100,000
- Are generally 65 or older or have a serious health condition
- Have a chronic illness that significantly impacts life expectancy (even if it’s not considered terminal)
If you have a chronic illness, your life expectancy is a key factor in determining eligibility and offer amounts. Policies owned by individuals with shorter life expectancies tend to receive higher offers since investors will have a shorter waiting period to collect the death benefit.
Chronic Illnesses That May Qualify for a Life Settlement
Many chronic illnesses can make you eligible for a life settlement, including:
- Heart disease
- Chronic obstructive pulmonary disease (COPD)
- Kidney disease
- Advanced diabetes with complications
- Neurological disorders (such as Parkinson’s or ALS)
- Autoimmune diseases (such as lupus or multiple sclerosis, in advanced stages)
Even if your condition isn’t listed, you may still qualify based on your overall health status and policy details. Every case is unique and it is always best to call.
Steps to Getting a Life Settlement When Chronically Ill
1. Determine If Your Policy Qualifies
Not all life insurance policies are eligible for a life settlement. Permanent policies (like whole life and universal life) are the most common candidates. Some term policies can also be sold, especially if they are convertible to permanent coverage.
2. Gather Important Documents
Your policy information as well as health and medical records play a crucial role in determining your policy’s value. While our platform gathers these documents securely on your behalf, some life settlement companies may request that you gather these items in advance.
3. Request Life Settlement Offers
You can get offers from life settlement providers or investors who buy policies. Each will assess your policy’s value based on your age, health condition, and the cost of premiums. When receiving a direct offer on our platform, there is no need to subtract a broker fee from the offer you receive. Always be sure that you are aware of any fees that may come out of your offer.
4. Evaluate and Accept an Offer
If a direct buyer has interest in your policy and finds value, they will make you an offer. Decide if you would like to accept this cash offer in exchange for your policy.
5. Complete the Sale and Receive Funds
Once you accept an offer, legal paperwork is completed by a licensed provider in your state, and ownership of the policy is transferred. You’ll receive a lump-sum cash payment, which you can use for medical expenses, home modifications, caregiving, or any other financial needs.
How Much Can You Get for Your Policy?
The payout amount varies based on several factors:
- Your age and health condition
- The death benefit amount
- Premium costs (lower premiums make a policy more valuable to buyers)
- Type of policy
On average, life settlements pay between 10% to 30% of the policy’s death benefit, but individuals with chronic illnesses may receive higher offers depending on their life expectancy.
Benefits of a Life Settlement for Chronically Ill Individuals
- Immediate cash for medical and personal expenses
- No more premium payments
- Flexibility to use the funds however you choose
- An alternative to surrendering your policy for little or no value
Are There Tax Implications?
Life settlements may have tax consequences, depending on how much you receive and how much you’ve paid in premiums. It’s always best to consult with a tax professional to understand how selling your policy may impact your unique tax situation.
Find Out If You Qualify
If you have a chronic illness and need financial support, a life settlement could provide the cash you need without taking on debt or depleting savings. If you’re considering selling your life insurance policy, contact us today for a no-obligation policy appraisal. 800-727-7654