Life Insurance isn’t exactly a subject that gets covered in school. According to LIMRA’s 2018 Insurance Barometer Study, nearly 60% of all people in the United States were covered by some type of life insurance. For such a common–and important–investment, it’s important to understand a few basics.
What is life insurance?
What does it mean to have life insurance? Think of it as something you might own, like a car or a house. Instead of something tangible, however, life insurance is more of a contract or an agreement with an insurance company. As you pay for your policy via “premiums” (like a mortgage payment or subscription cost) the insurance company, in return, provides a “death benefit,” or a (generally tax-free!) lump-sum payment to your beneficiaries when you pass away.
How does life insurance work?
There are a few different kinds of life insurance, but they all are centered on the idea of paying premiums to receive a future death benefit. For the sake of simplicity, we will mention two but focus on one of them.
First, there is term life insurance, which provides coverage for a limited amount of time, like 10-20 years (a term). It is generally a less expensive option, with significantly higher premiums after the term should you decide to continue coverage.
Secondly, there is whole life insurance, which is a more permanent type of policy that provides lifetime coverage. The premiums are generally more expensive, but with that additional cost comes two additional benefits: the lifetime coverage, and the “cash value,” a feature of the policy that works almost like a savings account–setting aside a portion of your premium payments and allowing them to accumulate interest and occasional dividends over time.
How do you sell life insurance?
For people wanting to discontinue their existing life insurance policy, selling is almost always a better (and more profitable) option than canceling. Regardless, this decision should always be made with the help of a trusted financial advisor.
How old do you have to be to sell your life insurance?
Because traditional life settlement services make their investment by receiving the death benefits of those policies they purchase, these services consider people over the age of 65 or those with serious medical conditions as the most eligible.
However, Aspen Life Settlements is interested in most whole life policies–regardless of your age or medical condition!
What is the best way to sell your life insurance?
At Aspen Life, we focus on purchasing people’s whole life policies (and some IUL policies, which are similar.) We are interested in these kinds of policies because of their cash value, the special savings component they have. We use these as a safe, conservative place to invest our money. Because this is our sole interest, we let our sellers keep their death benefits! This is how we are able to accept policies regardless of age or medical condition.
If you are looking to sell your whole life insurance policy, we encourage you to consider Aspen Life as an option. You receive payment for your policy, no longer have to pay premiums, and your beneficiaries will still receive your death benefit, minus any last available cash values.
2 thoughts on “Life Insurance Basics: What it is, How it Works, and More”
You got my attention when you said that a life insurance policy could provide death benefits or a payment to your beneficiaries when you pass away. This gives me the idea to shop for a life insurance policy as I always want to secure my future, especially when I retire. My kids are still minor, and the last thing that I want to happen is for them to carry the burden of paying for my funeral services should I die. Also, I want something to be left for them when I pass away. Thanks for sharing this.
Yes, life insurance is a great way to prepare to take care of your family when you’re gone! Aspen Life can take over paying premiums down the road, too–while letting you keep that death benefit!