How Do You Know When To Cash In Life Insurance? - July 29, 2008 -

When you cash in your life insurance it is often called a Senior settlement, a Life Insurance Settlement or sometimes just an Insurance Settlement. The way it works is that you are trading the cash value (i.e. surrender value) of your policy to a third party for cash. This may happen even though the insurance policy does not have an actual surrender value. At times the cash you receive may be in excess of the cash surrender value of the life insurance policy.

This is usually done at or near retirement age in order to obtain additional cash for living expenses. Not only is cash received but the premiums you have been paying for the life insurance are no longer paid by you thus increasing your cash value.Basically this is a wealth and estate planning method.

In prior years seniors who had life insurance policies and felt that the premiums were a burden or that they no longer needed a life insurance policy just dropped the policy or turned it back to the life insurance company itself.But now they have an alternative.They can sell their insurance policy to someone other than the life insurance company.In this way they get much more cash.

Furthermore persons who take advantage of this method can use the money they receive for any purpose whatsoever although many people assume that such restrictions exist. In fact they can use the money for travel, buy another life insurance policy, purchase real estate, develop their hobbies,invest in a business venture. It is their money to dispose of as they wish.

The question now becomes: just how much money will you get from cashing in your life insurance policy? In most cases you will get about five times the cash surrender value of the life insurance policy. However other factors enter into the computation also.

Not all policies or people qualify for a Life Insurance Settlement. The restrictions are:

You must be at least 65 years old.

The policy itself or what is known as the cash value must be at least $50,000.00

The health of the holder of the policy must not be as good as it was when the life insurance policy was issued and his or her life expectancy must be under 15 years. The life insurance policy must have been in effect longer than the probationary period.

Almost any type of life insurance policy is subject to being purchased. For instance: charities, individuals, trusts, term and group life insurance policies.

It is recommended that seniors take advantage of this great cash generating tool because the life insurance settlement may be substantially higher than the cash value of the policy. It is a mistake to let such life insurance policies lapse while this cash producing method is available. It is a no lose decision and should be seriously considered by all those eligible.

For more information on life insurance see the life insurance section of TheFreeAdForum.com http://www.thefreeadforum.com/infowizards/CAT/Personal-Injury-Attornies_56_1.html

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