A term life insurance plan is regarded as one of the best ways to secure your dependent family in the event of your unexpected death. It will provide a lump sum death benefit to your nominee after your demise. The fund can help your family reduce the financial burden in your absence. However, it is well-known that a term insurance plan does not provide a maturity benefit.
So, the term plan might not seem beneficial if the insured person is still alive and the policy is about to expire! In such scenarios, if you had chosen the return of premium2 option during inception or renewal, you will receive the paid premiums as a maturity benefit.
If you haven't done that and still don’t prefer a financial benefit from your term life insurance plan, you can just sell the term life insurance policy! Here is a detail of how you can go about doing it!
What Does Selling A Term Plan Mean?
Selling a term plan means converting your term plan for a cash value through the life settlement process. It provides the cash benefit when you feel you don't require the life cover anymore!
How To Sell A Term Life Insurance?
If you prefer to sell a term life insurance policy, you need to understand certain factors.
Conversion rider# option - Your term life insurance policy will qualify for the selling process when it has the convertible option. The convertible option helps you convert the term life insurance policy to a whole life insurance plan or provide the option to sell it using the life settlement process.
You can convert the term plan using the purchase of the convertible rider# during policy inception or upon renewal based on your insurer's policy conditions. The rider# will be available at an additional cost. However, it will provide a cash benefit through the settlement process.
When you have purchased the conversion rider#, you must understand the terms and conditions carefully. It might have an expiry date before which you need to plan for the conversion process of our term life insurance policy.
Qualifying for the life settlement process - When you want to sell a life insurance policy, you need to confirm if your policy will be applicable for the life settlement process if you convert it during the policy term. You can check it by filling out the eligibility form, submitting it to the relevant officials, or contacting the customer service team. The option will be based on your life insurance provider's terms and conditions.
Health and age-related factors - When you prefer to sell a term life insurance policy, your age and health conditions can affect the cash value from the life settlement process. Generally, you will receive a lesser payout if you are a healthy and younger individual planning to sell an insurance policy early in life. On the other hand, if you are an older individual between 65 and 70 years old, you will receive more payout in opposition.
Life settlement quotes - Finally, you need to contact a life settlement company that provides the quotes based on an appraisal of your term plan. It will assess the term life insurance policy, ask you a few questions and determine the cash value for the term plan. You can also utilise the online calculator if the life settlement company provides such features.
Tips For Selling Your Life Insurance Policy
Selling a life insurance plan does not take much time. However, you can follow these tips to make it simpler.
Hire a broker for the entire life settlement process.
Analyze the quote or the offer across several life settlement companies and choose the most profitable option.
Provide every detail about your term insurance plan, medical reports, etc., to ensure you get the maximum cash benefits.
Explore Other Alternatives
Although selling your term insurance plan can prove beneficial, the cash value is less than the death benefit ascertained for the policy during inception. Therefore, although you feel the term insurance plan is no longer needed, you can still prefer to leave a legacy for your loved family members. In addition, a term life insurance plan can provide varied, flexible features that can help you customise it based on your preferences. For example, when you purchase our TATA AIA Life Insurance plan, you can opt for the regular income payout benefit. It will provide a regular income to your family in your absence for the defined income period.
Other customisable features include increasing the sum assured at different stages in life, paying the premium for a limited term, etc. Furthermore, you can opt to purchase the online term plan to analyze different solutions based on the features and cost to choose the best solution for your financial needs.
Conclusion
A term insurance plan will secure your financial future in your absence. However, if you feel that a term plan may not be necessary after a certain stage in your life, you can sell it for a cash benefit using the life settlement process. It is a simple process if your term plan has a conversion rider#.
You can compare the quotes with different life settlement companies for the best offer. Although the life settlement process provides a cash benefit, it is less than the death benefit. Therefore, you must analyse the alternate options before you decide on selling your term life insurance plan.
L&C/Advt/2023/Apr/1167