How Old Do You Have to be to Sell Your Life Insurance Policy?
When determining whether or not to sell your life insurance policy and seek a life settlement there are many factors involved. One such factor is determining whether or not you are eligible. Your age is an important factor in this, but the truth is there is no magic number that makes you eligible. Instead, there are multiple factors that go into whether or not you are eligible to sell your life insurance policy, and age is only one of them. The other factors that are considered are your health, the value of the death benefit, your annual premiums, and the age of your policy
Age & Gender
When trying to determine how old you have to be to sell your life insurance policy a simple answer to the question is that a policyholder with average health likely will not be eligible unless they are at least age 65 or above. The likelihood of you being able to sell your policy goes up with your age. As a result, you will be more likely to sell your life insurance at age 75 than you would at age 70. Your health plays a large role in determining how old you have to be to sell your life insurance policy. The better health that you are in, the less likely you will be able to sell at younger ages. Someone at 65 who has a severe medical issue is more likely to sell their life insurance policy than someone who is 70 and in pristine health.
Your biological sex also factors into how old you have to be to sell your life insurance policy. Because men have a shorter life expectancy they often qualify at younger ages than women. For example, a 70-year-old man in average to good health has about the same chance of being eligible to sell his life insurance policy as a 75-year-old woman in the same health so long as both have similar life insurance policies.
Another factor that determines your eligibility is the face value of the death benefit. Having a higher death benefit will make purchasing your life insurance policy more potentially lucrative for an investor, making you more likely to qualify for a life settlement. The minimum death benefit for eligibility is $50,000, but you are much more likely to qualify if your death benefit is at least $100,000, with higher death benefits being more likely to qualify.
Your death benefit also works in tandem with your annual premiums. If your annual premiums are lower you are more likely to be eligible, with low premiums and a higher death benefit being the ideal combination. In a life settlement, your premiums are transferred to the investor, meaning you no longer have to pay them, but the investor does, making it more beneficial for the investor if they do not have to pay high premiums.
A policy must also be a certain age in order to sell. This is determined by the state in which you live. The life settlement company will determine how long you have owned the policy when you decide to sell it. Occasionally an outstanding situation will make the policy’s age not a factor. Situations such as divorce, death of a spouse, or some other extreme circumstance. However, this is based on a case by case basis and like the age, requirements are based on state.
Health conditions & more
Another option for those with either chronic or terminal illness would be something called a viatical settlement. A viatical settlement is an available option to you even if you do not meet the requirements to sell your life insurance policy, including being aged 65 or above. A viatical settlement works similarly to a life settlement, except it is intended specifically for people with chronic or terminal illnesses. Another difference is that since life expectancy is low the payouts are typically much higher, as investors expect a payout much sooner. Finally, it is more likely that someone receiving a viatical settlement would not have to pay federal tax, though this is not always the case. If you plan on seeking a viatical settlement it is advisable to first speak with a financial advisor.
If you have decided to sell your life insurance policy and you are at least 65 years old we encourage you to see if you are eligible. We have a life settlement calculator that you should use to help you determine whether or not you are old enough to sell your life insurance policy. Although there are many factors that are in play the main two to consider are how old you are and how healthy you are. You are very unlikely to sell your life insurance policy at less than 65-years-old unless you are chronically or terminally ill.
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