How do I reduce my life insurance premium fees as I age?

Senior Resources

If your life insurance premium fees are becoming too expensive, most life agents will recommend that you reduce your benefit. This should automatically reduce your premium, too. However, if for estate planning purposes you can’t reduce your life insurance benefit to the extent financially necessary, there are other options.

• Other family members may be able to make the premium payments on your behalf. For example, the policy beneficiaries might find it in their best interest to take over the premium payments to receive the full life insurance benefit in the future. This option would allow you to keep your life insurance benefits, eliminate your payments, and potentially reduce your family’s estate tax implications later.

• Another alternative may be to sell your life insurance policy in the secondary market. This may give you the cash you need to fund your expenses today. Repurposing a life insurance policy in this way can provide a lump sum greater than the policy’s surrender value but less than the total face value.

• It may be possible to retain some of your life insurance benefits and get cash now. By selling a portion of your policy in the secondary market, you would no longer have to make premium payments, could collect a cash settlement for current expenses, and still retain a portion of the death benefit.

Before you do anything, you should consult with your agent, estate planning professional, or attorney about your situation. And be sure to ask about these alternatives, even if your agent or attorney does not mention them first. There are resources available at the Life Insurance Settlement Association (www.lisa.org) so that you can learn about these options and be informed. Across the country, these options are helping seniors find better uses of their life insurance with respect to their financial situation and estate plan.

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