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When to Buy Life Insurance, When to Sell Your Policy, and When to Cancel Coverage.

When to Buy Life Insurance

Life insurance can be an important tool for someone who has loved ones he/she wants to provide for financially. Most life insurance policies are bought when a person gets married, has a child, gets a raise, has business interests, or wants to protect significant financial assets. Don't get scared by the idea of life insurance. You won't jinx yourself into dying early and you are not going to 'waste' money on an expense, which you will never see any benefit from.

You buy car insurance to protect your car. You should purchase insurance coverage to protect your income and how it provides for your family. Chances are, the money you spend on life insurance will turn out to be an expense. But, if you die prematurely, life insurance allows you to follow through on promises and dreams.

When to Sell Your Policy

You can sell a life insurance policy. A Viatical settlement or Life settlement is used when you want to sell your insurance policy and use the money while you are living.

People who are terminally ill entertain Viatical settlements. A Viatical settlement company agrees to purchase your life insurance policy for a percentage of the face amount and send you a check for that amount. You can use the money for whatever you like. Recently, I heard a story of a woman who wanted to follow her favorite football team and was able to do so by selling her current insurance policy. For lots of personal reasons, a viatical settlement can be a great solution. Sometimes a settlement is used when financial resources are scarce and the money can be used to improve quality of life or lift the ongoing financial burden of others.

Life settlements are used when someone wants to sell a life insurance policy and isn't terminally ill. Life settlement companies can buy life insurance policies when you have as many as 15 years left to live. Do some homework before you sell your policy and don't be pressured into selling your life insurance policy.

When to Cancel Your Coverage

This may seem obvious but you should cancel your life insurance policy when you don't need it anymore. Life insurance is used to provide financial assistance to loved ones who depend on your income. Most experts agree you should keep coverage in place until you have sufficient assets to take the place of life insurance, all your kids move out of the house or graduate college, if applicable, or you no longer have to financially provide for anyone. Life insurance does get more expensive as you get older.

On the other hand, if you own whole life insurance, you may have already paid long enough to stop paying life insurance premiums and maintain the life insurance policy. In this example, you don't cancel the insurance policy you stop paying the premium. The 'cash value' inside the policy may be used to make the premium payments. Ask your agent about the cash value in your life insurance policy. The cash value may be taken and used at your discretion.

Related:
Life Insurance Quote
Viatical Quote
Life Settlement Quote