A new vehicle, your own business or an investment with higher returns: There are many reasons for the termination of life insurance. One of the options is to sell the insurance policy. However, insured persons should compare the offers in advance.
The international financial crisis has left its mark on the secondary life insurance market in Germany. While the value of policies sold in 2008 was still around 500 million euros, in 2009 only about 100 million euros were realized. However, in view of the generally better outlook, the Federal Association of Investments in the secondary life insurance market (BVZL) is now confident again. Already last year, the purchase volume rose according to recent estimates to a total of 150 million euros. Tendency continues to rise.
Selling life insurance is basically easy: the insured offers his contract to a buyer. This pays the insured for a previously agreed sum and then continues the contract until the end of the term. The payment including the final surplus then goes to the buyer.
Termination is the “worst solution”
For consumers who urgently need money, this way can be quite useful. “The worst solution is always to terminate the contract prematurely,” says Peter Grieble of the consumer center Baden-Württemberg in Stuttgart. Because this is usually a loss for the insured. The reason: commissions and fees are retained by the insurance in full, the repurchase value reduced accordingly.
But before a policy is resold, savers should look at the alternatives, advises Susanne Meunier of Stiftung Warentest in Berlin. “You can also mortgage your life insurance,” explains the financial expert. Your own insurance company or a specialized company will then grant the insured a loan that can be gradually repaid. The advantage: the insurance protection remains in full.
Make insurance free of charge
Another option for damaging customers is to make the contract non-contributory. “You simply do not pay monthly contributions,” explains Meunier. This, however, affects the return. The best way consumers should expect their insurance company to calculate the consequences of this step.
Get several offers before selling
If policyholders decide to sell their policy, they should be well informed. Although most providers are serious in the opinion of Stiftung Warentest. Nevertheless, investors should critically review the offers. If a buyer promises very high sums for a policy, please be careful, says Peter Grieble. Because usually in this case initially only a small amount will be paid and the remainder will be transferred in annual installments. “That’s risky,” says Grieble. After all, no one knows if the buyer still exists in ten years.
In any case insureds should seek several offers, advises also Ingo Wichelhaus, board member of the BVZL. Different buyers rated the same policy differently. Influencing factors include the financial strength of the insurer, in which the policy was concluded or the previous term of the contract.
However, not every life insurance contract is suitable for sale. According to the BVZL, the contract should have a certain residual maturity and a minimum buyback value. “This frame should be as far as possible”, it says in a guide of the association. Ideal is a buyback value of 10,000 euros or more.
Keep death benefits
It is important for the insured to make sure that the death protection is maintained despite the sale, explains Susanne Meunier. This means that if the insured person dies before the end of the term, the heirs receive a death benefit from the buyer of the policy. However, all costs incurred until then, such as purchase price and current premiums, are deducted. “That’s a clean thing then,” says Meunier.