Retirement & Financial Planning Report

As you grow older, you might no longer want to keep paying premiums for life insurance. If so, your options include:

* Stop premium payments. Depending on the policy, you may get reduced coverage or no coverage at all.

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* Surrender the policy. You’ll receive any cash value in the policy.

* Donate the policy to charity. You can get a tax deduction and benefit a favorite cause.

* Sell the policy. This may bring you more cash than you’d receive from a policy surrender, especially if you have a serious medical condition.

If you are interested in selling an existing life insurance policy, you probably will find several obstacles to overcome.

* There is a lightly regulated market.

* There is no standard disclosure to help sellers, who might wind up receiving far less than their policies are truly worth.

While some sellers may receive 20 percent of a policy’s face value (the death benefit), other buyers might offer as little as 10 percent. You can wind up with a bad deal without realizing it. In addition, there have been cases where advisors have negotiated sales of life insurance policies but passed along smaller amounts to unsuspecting clients.

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To get the best price, insist that your policy be offered to at least 25 potential buyers. Ask to see the written offers on the stationery of all the bidders. Have your policy held in escrow by a reputable third-party until cash from the high bidder becomes available.