Assessing your eligibility and calculating how much money you could receive for a Life Insurance Settlement is not an exact science. However, the following guidelines – rough estimates – should help you understand the screening process.
Age and Health
In general, the following guidelines are used to assess your eligibility for a Life Settlement. You may be a good candidate for a Life Settlement if you have an unwanted Life Insurance Policy and meet one of the following criteria:
- Are male and 70 years old or older
- Are female and 75 years old or older
- Are male and 65 years or older with some health problems
- Are female and 68 years or older with some health problems
Only a Life Settlement broker will be able to assess your candidacy accurately.
It is important to note that if you have a terminal illness or very serious health problems, a Life Settlement may not be the right option for you. You should instead investigate whether or not your policy has an accelerated death benefit rider if you require funds before your death. A legitimate life settlement broker would help you assess the right option for you.
Type of Policy
Almost all types of Life Insurance policies are eligible for a Life Settlement. Though, in most cases, the policy should have been in force for at least two years.
Convertible Term Life and Universal Life are generally the most attractive types of policies to buyers.
Although sellable, there is generally less interest among buyers in Variable Life and Whole Life policies.
Face Value of Policy
In general, your Life Insurance policy must have a face value of at least $250,000 to be eligible for most Life Settlement programs.
While your policy may be eligible for a Life Settlement without meeting the following criteria, you have a better chance of generating buyer interest if your policy:
- Is from a carrier who is rated a B+ or higher by A.M. Best
- Carries a premium that is less than 10 percent of the Net Death Benefit
- Has a Cash Surrender value of less than 25 percent of the Net Death Benefit