Guys, looking at my overall financial condition, I notice that I'm paying almost $2200/year in insurance costs for things like loss of a child or the passing of a spouse. I originally took out these policies years ago when my daughters were young, anticipating day care expenses, etc. if my wife passed away. The child insurance was for taking care of funeral costs, etc.

I'm now at a point in my life where I have plenty of assets and the insurance is not that important to me anymore. One daughter is already married; my other daughter is graduating high school; my other daughter is entering her sophomore year in high school. We have amassed a fairly sizeable chunk of savings, and I'm not exposed at this point in my life if I simply self-insure. What can I do with the supplemental life insurance policy? I pay roughly $145/month for a policy that would pay out $1,075,000. I hear ads all the time about selling your policy. I'm not familiar with how that works or if I even have a policy that would allow for that.

Does anyone have experience with this? What are your thoughts as far as the cost I pay given we don't have a need for the money? Thanks in advance.

Some thoughts:

• These companies are generally interested only in people with less than 10 years to live to make it worth their while, mostly marketing to 70+ ages
• They will take a significant chunk of value for their efforts (mostly to cover selling expenses and profits), and a haircut of 50%+ of what you may consider "fair value" is pretty common
• If you have a health condition (diabetes, high blood pressure, past cancer diagnosis, etc.), you may not be able to qualify for life insurance again (at decent rates, at least), so if you have a health condition or life event that causes you to burn through your net worth, there may be nothing left for heirs.
• I have heard of these "settlement companies" for years, and something makes me uneasy about an entity that derives maximum financial benefit only if you die earlier than expected. Not saying they have a team of hit men or Kevorkian doctors deployed, but still... I think regulators monitor this "moral hazard" closely, but it's still a bit sketchy, IMHO...
Not trying to scare you, just food for thought.

That said, it costs nothing to get a quote (just time spent to go through their "application process", as I understand it). I'd get at least two quotes from competing companies just to make sure you're getting the best deal.

does the policy not have any cash value option? seems like some sort of whole life policy based on the cost, so it should.

As already mentioned, there are a lot of factors that come into play.

For the most part..

Age 65 or older
Your current health/underwriting class, usually needs to be not as good as it was when you bought the policy initially.
$250K or more in coverage.
Life expectancy of 15 years or less.
Prefer an existing permanent (whole life, universal life, second to die)
If it is term, it has to be convertible to a permanent policy.

I have done many and have had some that I thought were for sure to get an offer, not get one and have had some that I thought might be a waste of everyone's time, get offers.

I will say that the process is not as easy as they make it out to be. They do go thru an underwriting process with medical records, script checks, etc.. ..

They do not take it lightly, once a case gets underwritten and they have all of of the projected costs for premiums, then it goes out to an auction market and different funds will bid/compete on the policy.

I just completed one about a month ago and I really think there was more paperwork, signatures, getting papers notarized, than buying a house, if that is even possible.

I will add that probably almost all of this is ultimately funded via private equity and there is a bunch of money going to this market.

Hope that helps.

This is helpful. Much thanks. I'm only 53 and I am Type 1 Diabetic. This may be something I wouldn't otherwise be able to get if it wasn't from my employer.

Do you have whole life policies on your adult (and almost adult) daughters and your wife? Your daughter that is already married may be interested in becoming the owner of the policy and making her husband/ future children the beneficiary.