The Reason Why Should Someone Sell A Life Insurance Plan
June is life settlement awareness month and represents a good chance to answer the question of why someone should sell a life insurance plan
. A life insurance plan contract is an agreement between the insurance plan carrier & the owner/insured to offer an advantage upon the death of the insured to the known as beneficiary. In return, the owner/insured have to pay premium to the carrier in a number enough to save the insurance plan in force on each contract anniversary date. Does it ever seem sensible to sell an insurance plan & deny the beneficiaries from recognizing the full death advantage?
To correctly answer the question - you ought to think about another question - why did I purchase the life insurance plan in the first place & is that reason still good? In other words, will i still require the insurance plan?
For instance, suppose you bought the insurance plan for your wife because she wasn't eligible to a part of your salary if you passed away (life only annuity). This was the only reason for purchasing the insurance plan. Let's say that several years once you purchased the annuity (and the life insurance plan) your wife dies or you divorce.
The main reason you purchased the insurance plan will no longer exists & you no longer want to save paying a premium. You now own an obsolete asset that you could possibly sell in the secondary market or - at least - surrender to the service provider. An insurance plan sale will usually generate more cash than insurance plan surrender & could provide certain tax benefits as well. This is a good example of getting rid of a good point for maximum return on investment.
Let's check out this from another mindset. If you own a good point of any kind and you no longer require it or are interested - what are you going to do? You likely will attempt to reduce it. We aren't talking about a piece of artwork or furniture you store in your garage or attic. Most assets that outlive their usefulness are disposed of. The essence of this discussion is the method of disposal. Like paper or plastic - it's sale or surrender.