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Most people don’t realize they can sell a life insurance policy they no longer need—and get significantly more than the surrender value. A life settlement pays you a lump sum from a third-party buyer who takes over the policy and collects the death benefit later. The payout depends on your age, health, policy size, and premium cost, but it’s typically two to four times what the insurer would pay in cash surrender value. This page explains how the process works, what types of policies qualify, and what to watch out for before you sign anything.
Who can sell their life insurance policy
In some cases, a life policy can be sold via a life settlement transaction to a third party in return for a cash payment. Doing so may allow you to receive more money than if you just merely “cashed out” the policy.
A life settlement transaction involves selling your life insurance policy to a third party who takes over as the owner and the beneficiary of the coverage. The purchaser / new policy owner will continue to pay the premiums on the coverage.
When the insured passes away, the “new” beneficiary will receive the death benefit proceeds from the policy.
Who can't sell their policy for cash
Some life insurance policies have no value to a buyer. A life settlement is supposed to be a win-win for the buyer and seller of the plan. If you have a long life expectancy, no buyer is willing to give you cash and then pay the premiums for the next 20 or 30 years. It does not make sense. So here are some scenarios where your policy will not have any value.
Steps to sell your life insurance policy
If your life insurance policy qualifies for purchase through a life settlement, there are several steps that you’ll typically need to follow.
Who is a good candidate to sell their policy
While not everyone will qualify to sell their insurance policy through a life settlement transaction, good candidates may include those who:
- Are age 65 and over
- Have a face amount of $100,000 or more on their policy
- Have had their coverage in force for at least two years or longer
- No longer need or want the coverage (due to changes in financial needs and / or the premium becoming unaffordable)
Can I sell my term life insurance policy?
It is possible to sell a term life insurance policy for cash. All types of policies can be sold including whole life, universal life, and term life insurance.
Term life insurance can be sold in certain circumstances. Your term insurance policy could have value if it has a conversion option on the policy.
If the conversion option on your term policy has passed then, the plan must have an annual renewable premium option. If you have no conversion option, you must have a short life expectancy and high death benefit for the term policy to have any real value.
How to calculate my policy worth?
How much do you get for selling a life insurance policy? The value of a policy can differ, based on the age and life expectancy of the insured, as well as the type and amount of the life insurance coverage. In most cases, though, the offers that are received are higher - sometimes significantly higher - than the amount of the policy’s cash surrender value.
Each policy is evaluated on a case by case basis. Discussing your specific situation with a life settlement specialist can give you a better idea of what your may be worth.
We have our own in-house life settlement calculator which can give us estimated values of a policy quickly. Simply, fill out the contact on this page and we can quickly calculate your value.
Conclusion
Selling your life insurance policy for cash can be a great option. If you no longer want or need a insurance policy, fill out our quick form to see how much your policy could be worth. We have an internal calculator to see the value of your policy. We can turn around values quickly.
Over time, financial needs can - and often do - change. So, if you have a life insurance policy that is no longer needed, you may be able to sell it for cash. These funds could be used for paying off debt or even taking a long-awaited vacation.
At Insurance Geek, we specialize in finding the right coverage for our clients. That doesn’t just mean adding financial protection, though, but also moving forward when a policy is no longer needed.
We make the whole process of adjusting your insurance needs easy. If you’d like to find out what your policy is worth, give us a call and let’s chat.
About Brad Cummins
Brad Cummins is the founder of Insurance Geek and primary author of its educational content. Licensed since 2004, he brings over 21 years of experience structuring life insurance and IUL strategies for clients nationwide.
Fact checked by Ryan Wood
Ryan Wood is a licensed insurance professional and contributing advisor at Insurance Geek, serving as a fact checker and technical reviewer for life insurance and annuity content. First licensed in 2013, he brings more than 12 years of experience and holds licenses in over 40 U.S. states.
