When is it a Good Time to Sell a Structured Insurance Settlement?

Selling any structured settlement prematurely carries a degree of risk for a significant loss. Sometimes though, when financial circumstances dictate the need, it has to be done. There are some ways better than others though in which to sell a structured insurance policy settlement.

The first thing you may need to do is check the type of policy that you are holding. If it is a term life insurance settlement then this is obviously different to a life policy.

A life insurance policy is paid out to your beneficiaries upon your death. Some policies carry a clause dictating under which conditions (if any) that the policy can be cashed in. There are some life insurance policies that can be cashed in for the amount already paid in and no interest will be paid.

What this means is that you will only ever get your money back. So if you have paid your premiums for the past ten years, you will only get those payments back. Obviously this is a bad case scenario simply because you could have had the money on a term deposit in your bank and earned a whole lot more.

Then there are other policies which will pay out pro-rato after so many years and are not just payable on your death as they will have written into the fine print of the policy under which conditions they can be cashed in.

It is essential that you understand exactly what type of structured insurance settlement that you are holding and wanting to sell. Insurance policies are not designed like a monetary deposit in a bank. Insurance policies are structured in such a way that every term and condition must be met with before any payments will be made. Any term or condition that is not met will cause the insurance policy to be forfeited (if you don't pay your annual premiums, for example) or if you haven't held the policy for any (if specified) required time.

The first thing you really need to do is to read very carefully all the terms and conditions. Once you understand precisely what the requirements are of your policy you will then know what you want to sell all of or part thereof.

It is possible under some insurance policies to cash-in only a portion of the policy and leave the rest to mature as originally designed. These terms and conditions will, by law, be stated very fully in your insurance policy. If you are uncertain, unsure, or require clarification on any of the clauses then you would be well advised to seek out the services of a lawyer or an insurance investment adviser.

It is a good time to sell a structured insurance settlement policy rather than go into debt through a credit facility if you can't see any short term way in which to pay off the debt. Chances are that the interest rate will be considerably higher for a credit card than that which you may be earning on your insurance policy but this is something that you need to check out to be sure.

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Posted in: Insurance,Settlement,Structured