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Introduction to
Selling Your Life Insurance Policy
Can I sell my life insurance policy?
Not every policy can be sold. It depends on a few circumstances, as well as the policy itself.
By using our quiz you can find out if your policy qualifies – as well as the value you could potentially sell it for.
What is my life insurance policy worth?
If your policy is eligible, you may get paid 25% to 50% or more of your policy face amount (the amount that would be paid during the death of the insured).
For example, if your life insurance covers you for $200,000, you could get paid $50,000 to $100,000 for selling it.
When would I get paid? What happens if I die?
If you sell your life insurance policy, you give up the beneficiary rights. You will get paid immediately, but any money that would normally be paid when you die is forfeited.
When it could be better to sell your life insurance policy
We believe that owning life insurance is responsible; however, your life can change and so can your life insurance needs.
There may come a time when you no longer need your life insurance policy, such as when your kids are grown or you have outlived your spouse.
Being able to sell your policy in those instances – rather than cancelling it – is definitely a better financial decision.
Gender:
Male
Age:
59
Type Of Policy:
Whole Life
Health:
Moderate
Coverage:
$200,000
Possible Value:
Up to $70,000
Gender:
Female
Age:
65
Type Of Policy:
Universal Life
Health:
Severe
Coverage:
$100,000
Possible Value:
Up to $50,000
When it’s better to hold on to your life insurance policy
Selling your life insurance doesn’t always make sense, and in some cases, you can’t even if you wanted to.
If the reasons why you purchased your life insurance are still in place, such as growing children, then you’re much better off keeping your policy in place.
If selling a policy does make sense, you must still meet certain requirements in order to qualify. Your age, health, and what type of policy does have a direct impact and may prevent you from being able to sell your policy.
Gender:
Female
Age:
45
Policy Type:
Term Life
Health:
Good
Coverage:
$250,000
Possible Value:
Does not qualify
Gender:
Male
Age:
85
Policy Type:
Universal Life
Health:
Severe
Coverage:
$100,000
Possible Value:
$50,000+
Turn your Life Insurance Policy into Cash
True Blue is here to help you get insured. But when that insurance loses it’s usefulness to you, we can help you turn it into cash. We’ll help you find out if your policy Qualifies, and we’ll make sure you get the most cash if you decide to sell.
Frequently Asked Term life insurance Questions
Can I Sell My Life Insurance Policy?
Yes. A life insurance policy is an important financial asset. The policy represents a claim to a series of potential future cash flows. Because the policy itself can be objectively categorized as an asset, this means that it necessarily ought to have some sort of monetary value.
Could You Potentially Sell Your Life Insurance Policy In Order To Receive Cash Today?
Sometimes you can sell your life insurance policy, and sometimes you cannot—whether or not you can depends entirely upon your personal situation and the specific characteristics of the policy itself. Furthermore, in the instances that you can sell your policy, the amount of cash you will receive in return depends entirely upon what the market is willing to pay for it (which certainly changes over time).
How Do I Know If My Life Insurance Policy Is One That Could Be Sold?
There are a few distinct variables that will directly impact your ability to sell your life insurance policy. Typically, you need to be at least 65 years old and also have a policy that is expected to last longer than you are expected to live. Though predicting the exact date you are going to pass away is obviously something that is beyond both your and your insurance company’s ability to do, this prediction is generally determined by your current health and the average life expectancy for your given demographic.
What Influences The Value Of My Life Insurance Policy?
There are many factors that influence the current exchange value of your life insurance policy. For example: total amount you are covered for, the amount (if any) of equity you have already accumulated, and the amount of premiums you still have due to pay. If the premiums due are relatively low and the coverage is relatively high (typically $100,000 or above), then your policy may be a very attractive asset to certain investors.
Why Would I Want To Sell My Life Insurance Policy?
The most obvious reason you would want to sell your life insurance policy is that you no longer need the coverage and you would prefer to get cash today. If you have outlived your spouse, your children are grown and financially independent, or you no longer have any financial dependents, then it might make much more sense to exchange your policy for cash instead of continuing to pay for unnecessary coverage.
When Should I Consider Selling My Life Insurance Policy?
Begin by asking yourself a few important questions:
- Do I still need life insurance coverage? Deciding whether or not you need life insurance coverage is a personal choice based off of the number of dependents you may have, the degree of their dependency, and the rest of your current financial situation.
- Would anybody be financially hurt in the event of my death? Whether you have a spouse, children, or any other sort of financial dependent will greatly influence the risks and benefits of deciding to part with your life insurance policy.
- Are my monthly payments worth the coverage I am paying? Obviously, you want to drive down your monthly costs to the greatest extent you possibly can. If you don’t believe you are getting your money’s worth in coverage in exchange for the amount you pay each month, then selling your policy might be a good idea.
- What are the other financial assets I have in my portfolio? Life insurance is considered a financial asset, and therefore it is a part of your overall financial ‘portfolio’. A good portfolio is typically one that is diversified. If this is important to you, then you may not want to have cash as your only financial asset in the status quo.
- How much would it be worth to lose life insurance coverage? This question is one that is essentially a summation of all the others. Ultimately, a life settlement is going to give you money today in exchange for the benefits of your coverage in the future. Where the specific ‘line’ of what makes a good and bad deal exists, however, is entirely up to your subjective preferences.
How Much Is My Life Insurance Policy Worth?
The current cash value of your life insurance policy is going to be influenced by a number of different factors, so there is no permanent answer to what such a value may be. However, there are a few usually guidelines that might help you be able to get a better idea.
Typically, you can expect to receive about 20%-25% of your policy benefit up front, in cash. This means that if you have a policy benefit that is worth $200,000, then you will be able to ‘cash out’ for somewhere in the neighborhood of $40,000-$50,000.
What Is The Best Life Insurance Policy To Sell?
The Life Insurance Settlement Agency (LISA) recognizes that institutions typically prefer to buy universal life insurance policies with benefits over $100,000 from people who are over the age of 65. However, because there are people outside of these circumstances who are still looking to sell their life insurance policies, there are an ample number exceptions to these general rules of thumb.
