You may have heard of life insurance settlement companies but wondered why someone would be compelled to sell their life insurance policy. At first, it may seem unorthodox. However, when you have a life insurance policy, you’re investing in a future for your loved ones, which is a fantastic gift. But what if you need the money?

When you took out the insurance policy, you may have been in a good place financially and felt confident in your decision. However, as time goes by, things change. You may find yourself in a situation where you need the money you’ve invested in that policy.

One example of when this may happen is after a medical emergency or serious illness. Medical bills stack up quickly. What may start as a visit to the urgent care could quickly turn into a long-term medical issue costing tens of thousands of dollars in medical bills. Additionally, when undergoing medical treatment, you are more likely to miss work and have other increased expenses. 

Aside from a medical emergency, you may experience a financial hardship such as loss of employment. Most people can’t go very long without income. While having enough money in the bank to cover several months’ worth of bills, it’s impractical for most people. Even a few weeks without a paycheck will put most people in a scary predicament financially.

It’s also possible you aren’t facing a financial emergency, but instead made a conscious decision to use that money to do something you have always wanted to do. You may use it to buy a house or go on an extended trip. Many people would support the idea of using that money to enjoy life before it’s too late.

When you pay into a life insurance plan, that money is used by the insurance company for investment; it’s a significant way in which they make money. Insurance companies rely on you paying into a policy for many years before you die, so they can use your money the entire time, increasing their profit. 

Life insurance settlement companies will buy your policy from you at a discount. Whatever the payout amount of your policy is, they will give that amount minus a fee for their service. They will then own your policy, so when you do pass, they’ll collect the payout from the insurance company. 

 When you get cash for your policy, you can still take steps to take care of your family after you have passed. For example, you can prepay funeral expenses, you can pay off your house or vehicles, and you can put money into savings while still keeping what you need to get through your current crisis.

Prepaying funeral expenses will allow you to ensure your family doesn’t overspend on your funeral, and it will enable you to make sure everything is precisely the way you want it. You can pay for every detail of your service through the funeral home you wish to use, and then you need to make sure your family knows which funeral home. Depending on the amount of time that passes, your family may need to update some of your decisions based on availability, but the expenses will be covered.

Regardless of the reason, there’s no shame in cashing in a life insurance policy to use the money now. It’s your money that you have been paying into. Looking at it as your money will make it easier for many to make the decision. From there, the settlement company can explain precisely how the process works.