One person’s trash is another person’s treasure. We see this in yard sales, used car lots, and now, apparently, in life insurance. Unfortunately, like a $1,200 first edition hardcover autographed Salinger book being sold at a yard sale for 50 cents, most people don’t realize that their life insurance may be worth tens or hundreds of thousands of dollars or more, sometimes far more than getting the cash value out before cancelling the policy.
One component of good planning is having the right amount and right kind of life insurance to suit your current needs and into the near future. Many of our clients look at term life insurance to replace lost income and pay debts when children are young so they won’t have to sacrifice their plans for the future if one or both parents are not around. As some of our clients get older, they may look at more permanent insurance that can assist more with retirement, potential long term care needs, and even to assist with paying potential estate and other taxes. At that time, the term insurance may not make sense anymore. And later still, some may cancel older policies to use different insurance to make sure in retirement their savings are secure from market risk but still have growth.
But almost across the board some life insurance policy gets dropped or cashed out. For example, a 73 year old male with a $5,000,000 life insurance policy holding $210,000 cash value could simply turn in the policy and get his $210,000 out. However, the policy might be worth a lot more on the open market and could get him more than $1,500,000 for the same policy. While these kinds of numbers are not typical for everyone, the market value of life insurance being dropped increases with age. By far, the larger valued buyouts are for people age 60-79, and people who are already thinking of letting their life insurance go would prefer to have cash to further fund their retirement.
If you are considering dropping a life insurance policy and would like to see if there is any value in it, then please let us know. We would be happy to get you in touch with Mike Brooks from Mr. Marsocci’s other business The Care Assistance Center, LLC to review your policy. Please contact The Care Assistance Center, LLC at 919-518-8237.