Is Life Insurance a Good Investment for Entrepreneurs?

There are many forms of insurance coverage and investments you might take to safeguard your business, but some of them are more profitable than others. Using life insurance to save money for retirement, pay for a college education or even finance your business venture are all potential options if you buy the right policy. One of the biggest questions entrepreneurs have about life insurance is how much they can really make and whether they have to wait until they’re 65 to sell. A life settlement allows you to sell your life insurance when you are under 65 for a cash amount, which you can then choose to invest into your startup or add to your existing business’s capital.

What Type of Life Insurance Can You Sell?

The biggest mistake someone can make before buying life insurance is not understanding which types of policies are eligible to be sold. Some people focus solely on the size of the death benefit and price of monthly premiums. Temporary insurance is the most affordable, so someone with a tight budget and in good health will reasonably see it as the best option. However, temporary coverage is not eligible to be settled, so you will only be able to use it for its sole purpose of providing money to loved ones after your death.

You can, however, sometimes convert your temporary policy to permanent life insurance. Permanent or universal coverages can be settled for a cash value. When you buy a term policy, you often have the option to add a conversion rider. This insurance rider allows you to convert your term coverage into permanent life insurance later, making it eligible for settlement. If you have permanent, universal or whole life insurance, what is your policy worth? You can find out right now using a free life insurance calculator online.

How Do I Switch to Permanent Life Insurance?

Every provider sets their own rules, so you will have to speak with yours directly. In many instances, there is an age deadline for converting coverage. If you’ve exceeded the deadline, then you will only be able to cancel your term coverage rather than convert it. Then, you could apply for a permanent policy that generates a cash value.

How Much Does My Policy Have to Be Worth to Sell?

Generally, most life settlements are for $100,000 or more. The reason so many people wait until they’re in their mid-60s to settle or sell their policy is because they have accumulated a substantial value by that point. While the majority of people selling coverage are seniors or someone recently diagnosed with a serious medical condition, adults in their 30s, 40s and 50s can qualify as well.

The best way to plan ahead for using life insurance as business capital is to calculate how much your monthly premiums will factor into your policy value. Paying more builds wealth faster, but it isn’t a financially feasible option for everyone. For that reason, it’s best to look at coverage as a form of long-term investment rather than a source of immediate business aide.

How to Get Started with a Life Settlement

The ideal first step is to calculate the value of your policy. If it is at least $100,000, you should be able to qualify for a settlement by most buyers’ standards. However, everyone is different, and you may find it more advantageous to employ the help of a broker. They can get multiple quotes on your behalf and help you negotiate the best deal.

Marie Foster
Marie Foster
Marie Foster is a reporter based in UK. Marie has also worked as a columnist for the various news sites.


Please enter your comment!
Please enter your name here