1. What is Selling a Life Insurance Policy?

Selling a life insurance policy (also known as a life settlement) involves transferring ownership of your policy to a third party for a lump sum payment. This calculator helps estimate the potential value you might receive.

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• \( Face\ Value \) — The death benefit amount of your policy
• \( Surrender\ Factor \) — Percentage of face value the policy is worth (typically 20-60%)
• \( Fees \) — Any transaction or administrative fees

Explanation: The surrender factor depends on your age, health, policy type, and remaining premiums. Older individuals with shorter life expectancies typically get higher factors.

3. Importance of Policy Valuation

Details: Understanding your policy's potential value helps in financial planning, especially when considering alternatives to surrendering or lapsing a policy.

4. Using the Calculator

Tips: Enter the face value in USD, surrender factor as a decimal (e.g., 0.3 for 30%), and any applicable fees. All values must be valid (positive numbers, surrender factor between 0-1).

5. Frequently Asked Questions (FAQ)

Q1: What affects the surrender factor?
A: Factors include your age, health condition, policy type, remaining premiums, and current interest rates.

Q2: Are there tax implications?
A: Yes, proceeds may be taxable. Consult a tax professional for your specific situation.

Q3: Who buys life insurance policies?
A: Typically institutional investors or specialized life settlement companies.

Q4: What alternatives exist to selling?
A: Options include surrendering for cash value, taking loans against the policy, or reducing coverage.

Q5: How accurate is this calculator?
A: It provides an estimate. Actual offers may vary based on detailed underwriting and market conditions.