Can you sell a term life insurance policy? The answer isn’t a simple yes or no. It depends on whether you have the ability to convert it to a permanent policy, as well as your current age and health. In general, buyers are looking for permanent policies that belong to seniors over age 65 with serious health issues. If that doesn’t describe your situation, you may not be able to sell your term life insurance policy.
The first step? Determine why you want to sell. Based on your reason, we can offer some tips and suggestions. We’ll go through the reasons we commonly hear below.
➡️ Need to talk to a real person about whether to sell your term life insurance policy? Let us help. Call us at (800) 823-4852 or click the button below to see if a new policy might be more affordable.
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Is Your Policy No Longer Affordable?
Do You No Longer Need Coverage?
Is Your Policy Convertible?
Steps for Selling a Term Life Insurance Policy
Is Your Policy No Longer Affordable?
If you’re thinking of selling because your policy is no longer affordable, consider replacing it with a new, more affordable term life policy. We get it – unexpected expenses can add up. So can a job loss, or other unfortunate financial circumstances. Sometimes, you just need to downsize and reduce your budget to as little as possible.
But here’s the catch.
If you’re strapped for cash now, imagine what might happen to your family if you weren’t here. Do they depend on your income? If so, you still have a need for coverage. If your current policy is too expensive, we can help you search for a new one that fits a tighter budget. We have a couple strategies to try:
- Reduce your amount of coverage. The smaller the policy’s face value, the less it costs. It’s not ideal, but replacing your current policy with one that pays less when you die is a good way to give your family some coverage without breaking the bank.
- Opt for a shorter term. The shorter the term, the less it costs. If you’re paying on a 30-year term, let’s look at shorter terms and see how much that shaves off the price. Again, it’s not ideal, but it would leave your family with some protection as opposed to none.
- Try a fully underwritten policy. If you have a non-med policy and did not take a medical exam, we can search for a new policy with a bit less coverage and/or a shorter term and apply using the full medical underwriting process. In many cases, these policies are less expensive because you’re giving the insurer more direct information about your state of health (height/weight measurements, plus blood and urine samples).
➡️ Need to talk to a real person about whether to sell your term life insurance policy? Let us help. Call us at (800) 823-4852 or click the button below to see if a new policy might be more affordable.
Get a Free QuoteDo You No Longer Need Coverage?
If you’ve outgrown your need for coverage, you may be wondering, “Can you sell a term life insurance policy?” Situations that fit the bill include children leaving home, a mortgage being paid off, or a business being sold for retirement. If you bought your policy specifically to cover that financial need, and the need vanishes, then what?
We advise you to think ahead to make sure there’s not another need on the horizon. Here are some situations where your life insurance policy may still come in handy:
- Living benefits. Does your term life policy offer living benefits? Many insurers include a rider (policy add-on) that lets you access some or all of the death benefit if you’re diagnosed with a terminal illness. There may be other “living benefits” that mean you don’t have to die to take advantage of your policy.
- Final expenses. The expenses you bought your policy to cover might be gone, but what about the expenses yet to come? Unexpected illnesses or accidents can really rack up the medical debt, especially as we age. From medical debt to funeral and burial expenses, it might be a good idea to leave your policy in place in case you leave behind more bills than you expected. Final expense life insurance was specifically designed to cover this situation.
➡️ Need to talk to a real person about whether to sell your term life insurance policy? Let us help. Call us at (800) 823-4852 or click the button below to see if a new policy might be more affordable.
Get a Free QuoteIs Your Policy Convertible?
One deciding factor makes a term life policy more likely to sell: is it convertible? In other words, can you convert it into a permanent policy before you sell it?
Some term life policies come with the ability to convert them into permanent (lifelong) policies. It depends on the insurer and your specific policy. Some insurers include this without cost, while others offer it as a paid rider. If your term policy does come with this option, there’s usually a time limit they give you, too – anywhere from a few years to the end of your policy, or up to a certain age (such as age 70).
Check your policy documents and see if you have the ability to convert. If so, and if you still want to sell your policy, follow the insurer’s guidelines to make the conversion. In most cases, buyers only want to purchase permanent policies because that’s the only guarantee they will get paid.
The rare exception? If you’re in poor health and it doesn’t look like you’ll survive your term. But in that case, we recommend you consider holding onto your policy so your loved ones can get the death benefit.
➡️ Need to talk to a real person about whether to sell your term life insurance policy? Let us help. Call us at (800) 823-4852 or click the button below to see if a new policy might be more affordable.
Get a Free QuoteSteps for Selling a Term Life Insurance Policy
To recap, here’s how to determine if you’re a good candidate for selling your policy:
- Your policy is convertible, and you are age 65+ with health issues OR
- You have a serious or terminal illness and are unlikely to outlive your term.
When you sell a life insurance policy, it’s referred to as a “life insurance settlement.” A third party will make an offer to purchase the policy from you, and continue making the payments on your behalf. They become the new beneficiary, and when you pass away, they get the death benefit. That’s why buyers strongly prefer permanent policies – it guarantees they’ll get paid, since permanent policies pay out no matter when you pass away. If a buyer purchased a term policy and you outlived the term, they would have zero return on their investment. That’s also why buyers usually choose seniors with health issues when agreeing to buy a policy – they want to be paid sooner rather than later.
If you think you qualify, here’s how the process works.
- Contact the agent you bought your policy from. They will need to collect certain information from you, including a settlement application, authorization to obtain medical records, and a current policy illustration.
- Ask your agent to contact us. We can handle life insurance settlements and will ascertain the policy’s market value and then attempt to get a buyer for your policy.
- Decide whether to accept an offer. Just like when you bought your policy, your age and health factor into the price a seller may offer. The older you are, the better chance you have of selling your policy. If you accept an offer, we’ll have everyone sign the necessary documents transferring ownership of the policy and revising the beneficiary designation.
➡️ Not sure if you’d qualify to sell your policy? Let us help. Call us at (800) 823-4852 or click the button below to see if a new policy might be more affordable.
Get a Free Quote