- Even though your life insurance benefits won't be available once you die, you can still leave money to a certain person or organization - it will just come from the money that is leftover after using the funds from selling your policy. So, selling your life insurance does not mean that you're definitely robbing your beneficiaries of their gift. - In some cases, the money you receive is tax-free. - There are no regulations or restrictions on how you make use of the money you receive. You may spend as much of it or as little of it as you wish, however you please. -------------------------------------------------------------------------------- Risks of Selling Your Life Insurance Understanding the risks associated with selling your life insurance will help you make an informed decision. Be sure to consult a financial advisor or tax attorney to make sure you understand the implications of the sale. - You might lose your eligibility for some public assistance benefits, especially those based on your income and assets (such as food stamps, welfare, Medicaid and some Social Security benefits). -? There could be tax issues. Selling the policy will result in a tax bill if the settlement amount exceeds your cost basis. With improved medical care, the ill person may live longer than expected. - You might face unhappy heirs. This might not be a problem for you, but it could lead to a long road of (possibly legal) complications and battles. Some settlement actually companies require the beneficiaries to also sign off on any sale, which could be good or bad, depending on whether or not you're dealing with a cooperative beneficiary. -------------------------------------------------------------------------------- Other Options If you come to the conclusion that selling your life insurance policy is not for you, there are other options (though none that would provide you with such a large lump sum). An insurance agent should be able to help