One of my uncles is the proud owner of several antique automobiles. Growing up he would take me and my brothers on rides and teach us all about how the cars operated and all about the mechanics. Recently, a collector of antique automobiles approached my uncle and made an offer to purchase one of his favorite cars. In the end, my uncle did not sell but decided to keep his car.

This story paints the picture of how a life insurance policy asset should be treated. While a life insurance policy may remain an asset a policy owner wishes to keep, in the event a policy is going to be surrendered or lapses, it is important to realize there are buyers interested in making offers on life insurance policy assets.

Similarly, if you were to own a home for many years, would you simply walk away from the property? Or would you hire a real estate agent to find buyers to make a return on your investment?

Appreciation vs Depreciation

While it is important to realize a life insurance policy is an asset, it is also important to consider how it is an asset that can appreciate or depreciate over time. Similar to how a late model car depreciates while certain antique cars appreciate, the same applies to life insurance policies. When determining eligibility, older policies typically hold more value, however, the condition (health) and make/model (policy specifics) will make the greatest impact.

Take a 73 year old male in good health with a term life insurance policy that is no longer convertible and that reaches the end of the term in 4 years. In this scenario the life insurance asset would have depreciated to $0 because there would be no buyers interested.

Now take a 73 year old male with several health impairments (nothing life threatening) with a term life insurance policy that is convertible and has a conversion premium equal to 3.5% of the policy face amount. In this scenario the life insurance policy asset could have appreciated and have buyers interested in making offers to purchase the policy.

Appreciation Relative To Premiums Paid

Considering a life insurance policy asset that has appreciated and now holds value to buyers from around the world, it is important to relate that appreciation to the amount of premiums paid. The premiums paid into a life insurance policy help determine the cost basis for tax purposes.

A policy may appreciate from a secondary market value of $0, however, depreciate relative to the amount of premiums paid into the policy.

For example, a policy owner who has paid $100,000 of premiums into a policy may be able to obtain an offer for $80,000. This represents an appreciation of the life insurance asset value from the $0 offer possible when the policy was originally taken out, but would represent a depreciation of the life insurance asset value relative to the amount of premiums paid.

How Much Is My Life Insurance Policy Asset Worth?

While it is the #1 priority of policy owners and life settlement brokers to maximize the offer amount, be wary of Providers and Marketing Websites that funnel their leads to Providers. Unlike a life settlement broker, a Provider represents their funds and will attempt to price a life insurance policy asset as low as possible in order to maximize their returns.

Another determining factor of how much value you may receive for a life insurance policy asset is the number of potential buyers that review the policy. While a Provider represents one buyer, a life settlement broker will distribute a policy asset to a global network of buyers in order to maximize an offer.

Similar to a home inspection or "kicking-the-tires", a life insurance policy asset must be reviewed in order to determine how much it is worth. To complete this review medical and carrier documents must be requested and this requires the completion of a life settlement application. Rapid Life Settlements is the only life settlement broker with an Electronic Application Platform that makes the process fast, easy and simple.

Stephen Jass is the Co-Founder and CEO at Rapid Life Settlements. He has spent years in the life insurance and life settlement industries and is now determined to make the life settlement process as fast, easy and simple as possible.