If you’re sick and need cash, your life insurance policy could be a valuable resource. Knowing how to get cash from life insurance if you’re sick can help ease financial stress and provide much-needed funds for medical expenses, daily living costs, or other financial needs. In this article, we’ll explore the options available to you and how to make the most of your life insurance policy if you’re dealing with a serious health condition.
Understanding Your Options
There are several ways to get cash from your life insurance policy if you’re sick, including:
- Viatical Settlements
A viatical settlement allows you to sell your life insurance policy to a third party for a lump sum cash payment. This option is typically available to individuals with a terminal illness or a chronic condition that significantly impacts their life expectancy. The buyer takes over the policy, pays the premiums, and collects the death benefit when the policyholder passes away. - Living Benefits
Some life insurance policies include living benefits, also known as accelerated death benefits. This feature allows you to access a portion of the death benefit while you’re still alive if you are diagnosed with a qualifying illness. Not everyone will qualify and not every policy has this rider. Check your policy to see if this option is available. - Life Settlements
If you don’t qualify for a viatical settlement but still need cash, you might consider life settlements. This is similar to a viatical settlement but is typically available to seniors in good health or those with less severe medical conditions. It allows you to sell your policy for a lump sum that is less than the death benefit but more than the cash surrender value. - Policy Loans or Withdrawals
If you have a permanent life insurance policy with accumulated cash value, you may be able to take out a life insurance loan or make a withdrawal. Keep in mind that this will reduce the death benefit and may have tax implications. You will typically need to repay the loan plus interest.
Why Consider a Viatical Settlement?
Viatical settlements can be particularly beneficial for those facing high medical expenses or those who need financial support to improve their quality of life. Here are some reasons to consider this option:
- Immediate Cash Payment: Receive a lump sum payment to use however you wish—whether it’s to pay for medical bills, cover living expenses, or fulfill a bucket list dream.
- No Restrictions on Use: The money you receive from a viatical settlement can be used for any purpose, giving you the flexibility to manage your finances as needed.
- Relief from Premium Payments: When you sell your policy, you are no longer responsible for paying premiums, which can provide additional financial relief.
- Typically Tax Free: The proceeds from a viatical settlement are typically tax free as they are considered an advance of the policy’s death benefit. Always consult with your trusted tax advisor regarding your specific situation.
How to Qualify for a Viatical Settlement
To qualify for a viatical settlement, you generally need to meet the following criteria:
- Diagnosis of a Terminal or Chronic Illness: Most buyers require documentation from a medical professional confirming your diagnosis and life expectancy.
- Type of Policy: Viatical settlements are typically available for term life, whole life, or universal life insurance policies, although other types of policies may qualify.
- Policy Size: Policies with a face value of $100,000 or more are more attractive to buyers, but smaller policies may also qualify.
Steps to Get Cash from Your Life Insurance Policy
- Review Your Policy: Check your policy details to see if it includes living benefits or accumulated cash value.
- Assess Your Health Condition: Determine if your illness qualifies you for a viatical settlement.
- Get a Policy Appraisal: Contact an experienced viatical settlement company to get an appraisal of your policy’s value. We have been assisting policyowners with accessing the hidden value in life insurance for nearly 20 years.
- Evaluate the Offer: Decide if you would like to accept a lump sum of cash for your policy.
- Complete the Sale: Once you accept an offer, the buyer will take over ownership of the policy, and you’ll receive a lump sum payment.
Is a Viatical Settlement Right for You?
Deciding whether to sell your life insurance policy is a personal choice that depends on your financial situation, health condition, and future needs. Here are some considerations:
- Impact on Beneficiaries: Selling your policy means your beneficiaries will not receive the death benefit.
- Tax Implications: In many cases, the proceeds from a viatical settlement are tax-free, but it’s always best to consult with a tax advisor.
- Alternatives: If a viatical settlement isn’t the best option for you, consider alternatives like living benefits, policy loans, or life settlements.
If you’re dealing with a serious illness and need cash, your life insurance policy could be a valuable financial resource. Whether you choose a viatical settlement, living benefits or accelerated death benefits, or another option, it’s essential to explore all your choices to make the most informed decision.
We’re here to help you understand your options and guide you through the process. If you’re considering selling your life insurance policy, contact us today at 800-973-8258 to learn more about how to access the hidden value in your policy you need when you need it most.