Selling A Life Insurance Policy – The Health Factor

More than a few people are casting about for different ways to raise cash now as the Great Recession lingers on far beyond what pretty much anyone had predicted. One tool in your financial arsenal that you might not realize you have is a life insurance policy. You can sell it to raise hard, cold cash.A life insurance policy is a contract between two parties. You agree to pay premiums to a life insurance company. In consideration, the life insurance company agrees to pay out a death benefit lump such of cash should you pass away during the term of the policy. While this is a two party contract, there is no provision that precludes you from selling your policy. There are investment groups that will buy the policy in the hope of making a profit on it. Investors make money buying policies when the life of the insured is extinguished in a relatively short time. That is a rather PC way of saying the insured dies. It may sound a bit macabre, but it is perfectly legal and fairly common. In determining which policies to buy, investors look at two factors – health and age. Obviously, the older you are, the more likely the policy is to pay off soon, but what about health. Health is a huge factor in determining whether to buy a life insurance policy. Why? Simple. It is health, not age, that determines the life span of a person moving forward. Consider this simple example. Who would you expect to live longer – a 25 year old with terminal stomach cancer or a 85 year old in perfect health? All things being equal, the answer should be obvious. If you are considering selling your policy, you might be told you are not old enough to do so. This might be true, but then again it might not. In the life settlements field, it is the combination of health and age factors that are critical to the decision making process, not just one or the other.

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