A life insurance settlement calculator provides you with the results of a financial evaluation of your life insurance policy, but it cannot replace the thorough underwriting process required to accurately estimate the value of your life insurance policy. Many life settlement companies use technology to do the underwriting process for you, but you will need to submit medical documentation for some policies, and there are restrictions on the kind of policies that you can sell. Because the insurance carrier performs the underwriting process for you, a life settlement calculator won’t compare the underwriting results of a life settlement to the actual values of your policy, because that is not an option.
How much does a life settlement company pay for a life insurance policy?
A life settlement company evaluates all the available facts about you — including the terms and conditions of your existing life insurance policy and your medical history — and assigns a policy value to your policy that reflects the costs of acquiring and administering a life insurance policy, as well as the expected cash flows that you would receive from the policy if you were to sell it to the company. If you meet the eligibility requirements, you could sell your life insurance policy to a life settlement company at an agreed-upon value, in exchange for an upfront cash payment that is often reduced by certain taxes.
What is the process for selling a life insurance policy?
When buying a life insurance policy, you are in essence taking on a financial obligation to pay your beneficiaries if you die. But if you don’t need to have life insurance in order to maintain the basics of life (food, shelter, health care) you may not want to hold onto it indefinitely. The life settlement process involves purchasing life insurance from a company that already has life insurance policies with enough cash value to pay the premium for you. The difference between this cash value and the premiums that you and the company would have been paying is called the life settlement value, and this is what the life settlement company will offer you in exchange for your policy.
Summary
Life settlement companies evaluate the life insurance policy in question, and assign the policy an objective value based on several key factors, including the insurer’s payout formula. But a life settlement calculator is just a quick, one-size-fits-all look at the value of the life insurance policy, so it can’t replace a comprehensive medical underwriting, which is necessary for a precise, accurate valuation. In most cases, life settlements will not be able to fully pay for your medical bills. In addition, if you are not eligible to sell your life insurance policy, it is still wise to do a thorough medical screening. Remember, your agent should be your first call regarding life insurance needs, medical care, or an investment.
