You may be leaving money on the table if you simply cancel your policy. If there is cash value, that is what you will get back from the insurance company plus any unused premiums.
However, there is a market where you can sell your unwanted life insurance policies even term policies with no cash value. This is the life settlement market and is approved in California and many other states. Life settlements are regulated by the Insurance Commissioner. (see: https://www.insurance.ca.gov/0200-industry/0050-renew-license/0200-requirements/life-settlements/)
The way a life settlement works is you provide policy and health information to a life settlement broker (This email address is being protected from spambots. You need JavaScript enabled to view it.) who puts preliminary pricing together to see if the policy can be sold on the market for more than the cash value. There is no fee for this and no obligation to move forward with a sale. Here is the SEC's bulletin on Life Settlements: https://www.sec.gov/investor/alerts/lifesettlements-bulletin.htm
Once you decide to move forward, a final price is negotiated among the many buyers. You agree to the price you will receive. The policy ownership is changed to the buyer and you receive the funds. The buyer pays all future premiums and collects the eventual death benefit. It is possible to sell a part of the policy, and keep part yourself if desired.
There are four typical situations for life settlements:
- 1.A permanent policy you bought to protect your family but now the family can take care of themselves. Why keep it and pay premiums?
- 2.A group term policy that you can convert to a personal policy, but you don't need the insurance anymore because you are retiring. If you do nothing, you get nothing. If you covert and sell it you get something.
- 3.A term policy that is expiring and the new premium is going to be too high. If the term can be converted to a permanent policy, then the buyer would pay you and they would convert it and pay all future premiums.
- 4.A business owns a life insurance policy (key man, for example) that is no longer needed or perhaps no longer affordable. The business can sell the policy for cash.
There are other situations where a life settlement is appropriate, but you see how powerful this can be for you. Email me at This email address is being protected from spambots. You need JavaScript enabled to view it. for more information and preliminary pricing with no fee charged and no obligation to move forward.
