What Is Reverse Life Insurance?
Reverse Life Insurance is sometimes referred to as Life Settlements, but in reality Reverse Life Insurance is much, much more. While Life Settlements allow certain qualified individuals to sell their life insurance policy in the secondary market for life insurance, Reverse Life Insurance also facilitates solutions that allow qualified Policy Owners to receive a cash advance against their life insurance policy (Life Insurance Advance), convert their life insurance policy into an FDIC-secured benefit account to pay for long-term care (Medicaid Life Settlement), or sell their life insurance to pay for treatments and expenses from chronic or terminal illnesses (Viatical Settlements). Reverse Life Insurance even helps qualified Policy Owners sell their Term Life Insurance policies with no cash value (Term Life Insurance Settlement).
Selling Your Life Insurance Policy For Cash
The simple and sad fact is that more than 80% of life insurance policies never pay out a death benefit. Even worse, many Seniors find that as they age, their policy premiums skyrocket and become unaffordable. Most people in this situation simply surrender, cancel, or lapse their life insurance policy and lose out on all the years of annual premiums they’ve paid.
Why do they do this? Because they simply don’t know their options. Unfortunately, Reverse Life Insurance and Life Settlement options aren’t openly discussed, and when Policy Owners find out why they haven’t been shown all of their options, they’re understandably upset.
Why Haven’t I Heard About Reverse Life Insurance and Life Settlements?
Put plainly, the reason you have probably not heard about Reverse Life Insurance or Life Settlements is because there are Insurance Companies and Broker Dealers that forbid or ‘strongly discourage’ the mere mention of reverse life insurance.
They do this because it is often more profitable to the Life Insurance Company for you to cancel once your health has declined, as it typically does with age. In fact, many Life Insurance Companies operate on a pricing model known as “Lapsed-based Pricing”, where they factor in the large profits they make from canceled, lapsed, or surrendered policies. A Wharton Business School study concluded that Life Insurance Companies actually encourage cancellations and lapses. It’s no wonder that news stories about Life Insurance Companies arbitrarily raising premiums by as much as 100% have become more and more common .
Because of these reasons, it’s absolutely perplexing that a Life Insurance Agent can represent that they are your financial planner or adviser, yet still allow you to simply cancel your life insurance policy while they may have knowledge of other options. Options like qualifying for a lump-sum of cash that is, on average, 4 to 10 times more than your cash surrender value.
Are Reverse Life Insurance and Life Settlements Regulated?
Americans are not just learning about the Reverse Life Insurance option on their own. Increasingly, States are passing legislation that compels Life Insurance Companies to disclose to Policy Owners that there are additional options that may be available, instead of just cancelling, lapsing, or surrendering their life insurance policy and walking away from years of premiums that have already been paid. Currently, there are 48 states that have some form of Reverse Life Insurance or Life Settlement regulation enacted.
Some states have gone as far as to allocate public funds to educate the consumer about the Medicaid Life Settlement option in an effort to keep senior citizens off of State Medicaid rolls. In fact, just recently, Florida passed a new law that requires Life Insurance Companies to allow and facilitate access to information about alternatives to canceling, lapsing, or surrendering a Life Insurance Policy.
Though the United States Supreme Court has affirmed your right to sell your life insurance policy in the secondary market for life insurance, most people are still completely unaware. That, may soon change, however, as new Department of Labor Fiduciary regulations force more Agents and Advisors to act in the best interests of their client and not the Life Insurance Companies or Financial Services Companies.
Which Insurance Policies Qualify For Reverse Life Insurance?
Permanent Life Insurance Policies (such as Universal Life Insurance or Flexible Premium Adjustable Life Insurance) that have underperformed the cash value illustration that you received when you purchased your life insurance are prime candidates for a Life Settlement. Similarly, Permanent policies which have increasingly expensive annual premiums are also good candidates. Term Life Insurance Settlements will even pay you for your Convertible Term Life Insurance or Group Insurance. Basically, any type of Life Insurance policy, with or without cash value, may still qualify you for a lump-sum of cash instead of you just lapsing your policy.
If you no longer need the life insurance you purchased, or if the premiums on your life insurance policy have become too expensive, you owe it to yourself (and your family) to have your policy appraised as Reverse Life Insurance.
Though most people who qualify for Reverse Life Insurance receive more than four times the cash surrender value of their policy, your policy does not have to have any cash value to qualify as a life settlement.
It’s not always necessary for you to sell your entire life insurance policy and it is often possible to retain a portion of your life insurance coverage or even get a life insurance advance and never have to pay premiums again. There is no obligation or expense to see if you qualify for one or more of the many Reverse Life Insurance options.
Call or contact us today to see if you qualify for Reverse Life Insurance. We’ll assist you with a free, no-obligation qualification appraisal which is completed by a licensed Life Settlement Buyer in your state. If you do qualify, we’ll also assist you with the paperwork. You’ll speak directly with the buyer, and the decision to sell or keep your Life Insurance policy is always in your control.