An ‘Enhanced cash surrender value” offer from your life insurance company may have taken you off guard. Some Life Insurance companies are offering their policy holders an enhanced cash surrender value option which will pay them more money to surrender or cancel their life insurance policy than they currently have in cash value.
Why would an insurance company make an enhanced cash offer to buy back your life insurance policy? It should really make you think, and you absolutely need to get a life settlement valuation or life insurance appraisal before you decide to take your insurance company’s life insurance buyout.
It amazes me that the life insurance industry developed standards to sell life insurance on a needs basis, then turn around and offer certain of their policy holders cash money to cancel their contracts, without ever seeing if they need the life insurance they are being solicited to cancel.
Viatical.org routinely speaks with people that received a life insurance buyout letter in the mail from their insurance company telling them that if they cancel their insurance policy, they could get a higher cash surrender check, but they have to act within a specified time period. Nothing like a little pressure and a carrot to get you to cancel something that you were told you needed.
Guaranteed Universal Life (GUL)
Guaranteed Universal Life contracts are the policies that life insurance companies are trying to get off the streets. The reason is that they are guaranteed to pay a death benefit to you, provided you pay the premiums that were stipulated when you bought your life insurance policy. It does not matter if you have a cash value on a GUL, provided you pay your premiums, your life insurance company will ultimately have to pay the claim when you die.
Though estimates vary, it is safe to say that somewhere around 90% of all life insurance policies lapse or are surrendered before they ever pay a death claim. Unless you have a whole life insurance policy, where you pay higher premiums for the life of your policy to assure you have the coverage and cash in later years, your current premiums are typically not guaranteed.
A Guaranteed Universal Life policy was a tremendous product for consumers giving them the best of both worlds. They had a tax favored vehicle for excess cash deposits and could rely upon having insurance for their lifetimes by only meeting the minimum premiums set forth in their life insurance policy.
Many life insurance companies chose not to issue Guaranteed policies and many of the carriers that did issue GULs are now regretting it and taking measures to mitigate the future liability of people NOT cancelling their life insurance policy before they die, thus making a claim payable.
An insurance company would much rather keep all of your premiums and have you lapse your coverage without ever paying a death claim and for the most part model their businesses to that end.
Fair Market Value of Your Life Insurance Policy
The fair market value of your life insurance policy is whatever someone is willing to pay for it. If your insurance company is willing to approach you with an unsolicited offer to sell your policy, please stop and consider that it might be worth more than they are willing to pay you. More times than not, if you have been approached with an enhanced cash surrender value option letter from your insurance company, companies that purchase life insurance policies will offer you more money.
Companies that buy life settlements will absolutely be able to see the same value that your life insurance company is trying to take back with their offer to buy back your life insurance policy. If you have a Guaranteed Universal Life contract and are considering canceling or have received a life insurance buy back letter, please take the time to have your policy appraised so you know if the life insurance buyout offer is truly the fair market value of your life insurance policy.
If you qualify and are trying to sell your life insurance policy, please get more than one bid. The viatical.org direct platform will get your policy in front of a large number of institutional buyers of life insurance and the transaction will be closed compliantly by a licensed life insurance settlement provider in your state.
It only takes a 5-minute phone call to learn if you are likely to qualify to sell your life insurance policy directly to a licensed buyer.
If you qualify, our platform will automatically gather the necessary illustrations from your insurance company so that your policy may be appraised. Medical records are gathered in a HIPAA compliant manner. We take your security very seriously and have been helping people learn if they have value for over 15 years.