Many types of life insurance policies can qualify for a life settlement, but some are more attractive to buyers than others.
Universal life policies are the most commonly purchased because they offer flexible premiums and predictable long-term structures. Whole life policies may also qualify, though their cash value and internal costs must be carefully evaluated. Convertible term policies can be strong candidates if they still have conversion rights that allow them to be turned into permanent coverage. Guaranteed universal life policies are also appealing because of their stable premiums and long-term guarantees. Indexed universal life and variable policies may qualify depending on premium requirements and carrier rules.
Policies under $100,000 rarely qualify because they do not fit most buyer models. Group life, accidental death insurance, and very new policies generally do not qualify. Ultimately, the most important factors are the insured person’s age, health history, premium structure, and policy size. Many seniors are surprised to learn that policies they assumed had little value may actually be eligible for a settlement.
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