If you’ve decided that your life insurance policy is no longer necessary, one option is to sell your policy for its cash value. California has specific laws governing this process, but it is possible. The team at Persis Insurance and Financial Services Corporation explains life settlements and the regulations surrounding them in California.
What Is a Life Settlement?
A life settlement involves selling your life insurance policy to a licensed provider for its cash value. The amount you receive varies by carrier and policy, but is generally lower than the death benefit your beneficiaries would receive and higher than the policy’s cash surrender value. Once you receive payment, the provider assumes responsibility for paying the premiums on your former policy until you pass away, at which point they collect the death benefit.
How Does It Work?
You choose a licensed life settlement provider, and they’ll offer you a cash amount for your policy. If you accept, you receive the payment, and the provider takes ownership of the policy. If you decline, you can seek out another provider for a potentially higher offer. Once an arrangement is finalized, you receive the cash, and the provider gains control of the policy. Keep in mind that you may owe taxes on the transaction, and your beneficiaries will no longer have access to the death benefit.
Are You Eligible for a Life Settlement in Conoga Park, CA?
California regulates these transactions under its Insurance Code, primarily through the Life Settlements Act. Most policyholders who qualify for a standard life settlement are age 65 or older, though younger policyholders may still be eligible if they’ve experienced a significant change in health. Separately, California also allows what’s known as a viatical settlement for individuals of any age who have been diagnosed with a terminal or chronic illness and have a life expectancy of 24 months or less; in these cases, the standard waiting period on the policy is typically waived.
Is selling your life insurance policy the right decision? That’s a personal choice. An agent at Persis Insurance and Financial Services Corporation can help you weigh the pros and cons of a life or viatical settlement and walk you through alternative options that may better suit your needs. Ultimately, we’re here to support whatever decision you make. Contact our Conoga Park, CA, office for more information.
