Has Anyone Sold Their Life Insurance?

[Rianne]

I keep seeing this ad about selling your life insurance policy. We've had a term policy for years, 300K which we're thinking of dropping. Both in pretty good health and assets are enough if one of us dies. I was tempted to call, but I don't want to give a bunch of information. Scam or worth it?

 

[jazz4cash]

I dunno but I doubt if it's worth it. I've seen those commercials also and wonder how the heck you could sell a term policy unless it's a viatical. I've never seen any large well known insurers offering this service.

 

[Debinnov a]

I thought you could only sell whole life that has a cash value?

 

[pb4uski]

+1

 

[jazz4cash]

I thought you could only sell whole life that has a cash value?

That's what I thought too but these TV ads claim you can sell a term policy also.

 

[gauss]

That's what I thought too but these TV ads claim you can sell a term policy also.

Just "thinking out loud here", and not sure if this concept would actually be legal in any states, but how about the following scenario.

#1) You sign a legal contract with the organization wishing to buy your policy.

#2) They agree to pay the premiums and perhaps offer you up front compensation. In return, "you" agree to turnover the proceeds when you die and place them as first and sole beneficiary on the policy.

#3) The original insurer would not be party to this transaction

#4) When insurer gets notification of your death, they go to court to collect the insurance payment that they "sold" to you. This may not be necessary if you kept the other party as sole beneficaiary on the policy.

Again -- this is all speculation.

-gauss

 

[jazz4cash]

Gauss
It makes sense except in the case of a term policy what happens if the term expires before the insured?
I'm hoping the OP will contact them and give us an update.

 

[athena53]

This practice has been going on for decades. I can't imagine you'd get much for a term policy unless it's got some pretty favorable renewal conditions (guaranteed renewal, for example, maybe even no premium increases).

It mostly seems to benefit the entity in the middle of the sale. There are legitimate reasons for wanting to sell your policy- after a diagnosis of something terminal you might want to have the money now for medical expenses or a last-fling dream trip. Many of the purchases have been funded by investors, who lost big when they bought policies of people with AIDS just around the time retroviral therapies were developed. They thought they'd get a payoff in the next year or two and instead the policyholder lived for many years after the sale, thanks to being able to manage the disease with new therapies.

 

[COcheesehead]

It’s called a life settlement. Google it.

 

[SumDay]

Seniors Beware: What You Should Know About Life Settlements | FINRA.org

 

[gayl]

term policy for years, 300K

Do term policies have cash value? IDK haven't had life insurance (other than employer provided life insurance) since my 30s

 

[aja8888]

Do term policies have cash value? IDK haven't had life insurance (other than employer provided life insurance) since my 30s

No, they are very simple policies that insure you for a set amount with a fixed premium and a policy termination date.

 

[jazz4cash]

Other than those TV ads, the other (google) references I've found say term policies cannot be sold because they have no cash value.

 

[Rianne]

Other than those TV ads, the other (google) references I've found say term policies cannot be sold because they have no cash value.

That's what I thought. I got talked into a whole life policy about 25 years ago. Of course, Bob Brinker set me straight on that one (listening to his radio show). I cancelled it feeling like an idiot because I probably got screwed out of the commission anyhew...live and learn.

We bought term after that and this policy has a 20 year out guaranteed yearly payment. We should probably just keep it as it upgraded a couple of times.

I just wondered if anyone ventured to take up that TV offer and if was legitimate.

 

[jazz4cash]

I just wondered if anyone ventured to take up that TV offer and if was legitimate.

LOL, I was hoping you would do that and report back. Be careful about giving them too much info. I would use a throwaway email etc.

 

[Independent]

Do term policies have cash value? IDK haven't had life insurance (other than employer provided life insurance) since my 30s

Generally, no. And, when they do, the cash values are small.

However, it is technically possible. Cash values tend to show up on policies issued at "higher" ages and with "longer" level premium periods.

I know of at least one life insurer that limited the maximum issue age on a particular term form just to avoid the administrative hassle of dealing with cash values on a term policy.

 

[Independent]

Other than those TV ads, the other (google) references I've found say term policies cannot be sold because they have no cash value.

Life settlement companies do not buy policies for the cash values. They buy them for the death benefit.

If you're in poor enough health, someone should be interested.

Of course, as the link above points out, there are lots of considerations.

 

[calico1597]

About 20 years ago we were in the bank doing paperwork for new CDs when the banker gave us information on viaticals with Met Life. It sounded too good to be true, a short term investment with high interest. He said many local folks were investing so we joined in. I think over a couple months we invested around $20K.

About five years later we were informed the company was a fraud. It was based in Florida, the states attorney's office took over the company's assets and we were refunded about half of our investment over the next couple years.

The banker promised to refund all $$ to us, but he left the bank (or was fired) and later filed bankruptcy. The bank denies any knowledge that he was selling anyone these investments.

It was a hard lesson to learn. We worked for those dollars and was proud to build the saving we had.

 

[hesperus]

I actually have a policy my parents took out on me many years ago (I was into risky sports) now valued at around $200K cash out. I inherited it, and we have assets enough so as not to need it for my DW. Have not sold it, or even thought about that, but am looking at a 1035 exchange into another product, probably a variable annuity. I just want to put the money to work in a less opaque product, and not take the tax hit all at once.

 

[bberris]

No, they are very simple policies that insure you for a set amount with a fixed premium and a policy termination date.

Correct, they don't have cash value. However, a term policy might have some value in the final years, if it is a level term policy. In the last year of my term policy, the expected value was something like 5 x the premium. Alas, I lost that bet.

 

[athena53]

Correct, they don't have cash value. However, a term policy might have some value in the final years, if it is a level term policy.

Yes- as an example, if you've just taken out a 5-year level term policy for $100,000, there's a nonzero chance you could die within 5 years. If you're a 50-year old male you have a 3% chance of dying during the policy period using a mortality table on the SSA site. Neglecting any profit or expense loads, that policy would be worth 3% of $100,000, or $3,000, minus any premiums the investor would have to pay during those 5 years. Factor in premiums and expense and you'd get less than $3,000. I suspect that it would be worth it only on very large policies where the policyholder is in poor health.

 

[brett]

No. We never had whole life policies. We reduced our term insurance when our children left and when we became financially independent.

 

[MarieIG]

No, I have never contacted one of these places. Right now DH has a term, and I have a term through my new job, as I am otherwise uninsurable. When I was young and first married, I bought a whole life from All State. I kept sending in money, and the cash value never did rise above zero, so I cancelled it.

The "value" of a term policy such as yours depends largely on your health. Which involves turning over a great deal of personal information. For a healthy, say, in the range of 60 year old female, the value of your policy for the purchaser may be extremely small, if anything. Athena did the math . . .

It appears that the assumption is, if the purchaser is not honest, your only risk is financial

 

[bberris]

Gauss
It makes sense except in the case of a term policy what happens if the term expires before the insured?
I'm hoping the OP will contact them and give us an update.

Then the buyer of the policy loses. In related news, not all stocks go up.

 

[pb4uski]

https://www.thinkadvisor.com/2017/0...ith-a-life-settlemen/?slreturn=20180405212039