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Life Insurance: Sale Of

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If you have been diagnosed with a serious or life-changing condition, you may be able to obtain cash by selling your life insurance to purchasing companies that are not related to life insurance companies. The sale can occur either as a "viatical settlement" or a "life settlement" (which is also known as a "senior settlement.")

A viatical settlement involves the sale of a life insurance policy by someone with a short life expectancy. Age is not a factor in a viatical settlement.

In theory, a life settlement is the sale of a life insurance policy on the life of an insured who is age 60 or older. In reality, purchasers of life settlements also require that the insured has a limited life expectancy of 12 -- 14 years or less.

When considering whether or not to sell a life insurance policy, understand how a sale works and what it means to you -- including possible tax consequences. While a viatical or life/senior settlement can be very beneficial, the sale process can sometimes be complicated. There is no one size that fits all when it comes to the best way to sell a life insurance policy.