People often ask if they can sell their life insurance policy. You may want to sell your policy for a variety of reasons. Do you have an alternative or do you just need the cash for another plan? Whatever the reason, there’s a standard procedure for selling a life insurance policy in return for money, known as a “life settlement.” However, before you proceed with selling your life insurance policy, there are certain things to keep in mind as to whether selling your life insurance policy is worth selling.
Before delving into the pros and cons of selling this type of insurance, it is important to get to understand what Life Insurance Policy really is.
Meaning of Life Insurance
To get to learn about the pros and cons of selling a life insurance policy, you must first understand the meaning of life insurance policy.
Life insurance is the contract between an insurance company (insurer) and a policy owner (insured) in which the insured pays monthly or yearly amounts (premium) to the insurer with the promise that the insurer will pay a larger promised amount (death benefit) to the dependents of the insured upon his death. There are basically two types of Life Insurance plans which are:
- Pure Protection: This is designed to secure the future of your family by making available a lump sum in your absence or demise.
- Protection and Savings: This helps in planning for your desired long-term goals such as financing your children’s education, buying homes, travel expenses, and much more while offering the benefits of a Life Cover.
How to Sell a Life Insurance Policy
To sell your life insurance policy, the first step to consider is to determine whether this process is the best option for you. This is because you will be unable to get your policy back once you’ve sold it. So once you have made up your mind about selling this policy, you should get in touch with a life settlement company – companies that purchase existing life insurance policies.
Find below a detailed guide to selling your life insurance policy.
1. Get your insurance policy assessed: The first thing is to have your policy appraised to determine its worth. This can be done by the life settlement company of your choice or a third party. However, having this documentation prepared ahead of time makes the selling process go more smoothly.
2. Compare life settlement firms: Once you’ve established the worth of your policy, it’s time to look into companies. Evaluate the ratings of several life settlement companies with the appropriate investigative bodies. Ensure you go for companies with strong financial ratings and fewer than average customer complaints.
3. Contact a life settlement company: Once you’ve decided on a company, get in touch with one of the company’s representatives either through phone or email to inform them of your intention to sell your life insurance policy. They would then require relevant documentation to verify the authenticity of your claims. They will also need to consult with the insurance agent who is currently in charge of your policy. Once these procedures have been verified, you can hold on until the sale is concluded.
4. Signing of Paperwork: You will be contacted by the chosen company as soon as the policy has been sold and you will receive a check from this insurance company. You will be asked to sign the document to complete the transaction.
The Pros and Cons of Selling Life Insurance Policy
As a Life Insurance policyholder, the pros of selling your insurance policy are;
1. There would be no further premiums to be paid
2. Easy process of selling
3. Cash payment from proceeds
while the Cons of selling as a Life Insurance Policyholder are;
1. Lesser sale price than death payout
2. Loss of policy and coverage
Below are the pros and cons of selling a Life insurance policy as an Insurance agent
The Advantages of Selling Life Insurance Policy
As a certified health and life agent, you can sell whatever products you want. The different products to choose from range from Auto Insurance, life insurance, the Health market, cancer insurance, and many other products to consider.
As an independent insurance agent, you can select the products to sell. Because insurance plans vary, this is an excellent way to diversify your portfolio. Your clients will value the variety of plan options you can provide.
2. Job Safety
Fortunately, it is a known fact that selling insurance is profitable. You stand to earn commissions on any of the plans you sell. The amount you hope to take home is dependent on how you are able to sell yourself to potential clients. You can also make more money with your repeat customers once they make renewals on their plans, so having loyal clients pays off eventually.
3. Schedule Flexibility
As an Insurance agent, you do not have to sit at a desk all day. You are most likely having to keep several meetings and appointments with clients to help them find the best plan. The benefit of this is that you get to plan your own work hour.
The Disadvantages of Selling Life Insurance Policy
1. Unstable Income
Although the insurance sector remains stable and lucrative, it can be challenging to plan ahead and know where your next payment will come from as your paycheck will be determined by the number of sales you make. To achieve success in this sector, you must be proactive. If you lack motivation or self-discipline, your profits will reflect that. Consequently, insurance agents that work diligently, keep abreast of market changes, and make an effort to cultivate customer loyalty will achieve great success in this profession.
2. Pleaser of People
Since the entirety of this job entails interacting with customers, it may not be the greatest career option for you if you dislike interacting with people. To get clients, you will almost probably need to make cold calls. You should reconsider seeking a profession in the insurance industry if this upsets you. Do you get nervous when you knock on someone’s door? Perhaps you should reconsider your decision to become an agent.
Additionally, you must always consider your clients’ wishes, as the purpose of your employment is to discover a solution that fulfills their requirements. This will demand some of your time and work.