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 when you die).
For example, if your life insurance covers you for $200,000, you could receive $50,000 to $100,000 if you sell your policy (not counting any fees that might be involved).
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 right away, but you forfeit any money that would normally be paid when you die.
Can you sell your term life insurance policy for cash?
True Blue is here to help you get insured. But when that insurance loses its usefulness, 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 possible if you decide to sell.
Frequently asked questions about selling life insurance policies
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 I sell my life insurance policy to receive cash today?
Whether you can sell your life insurance policy depends on your personal situation and the specific characteristics of the policy. In the instance that you can sell your policy, the amount of cash you will receive depends on what the market is willing to pay (which changes over time).
How do I know if my life insurance policy is one that could be sold?
A few variables will affect your ability to sell your life insurance policy. Typically, you need to be at least 65 years old and have a policy that is expected to last longer than you are expected to live. Obviously, neither you nor your insurance company can predict the exact date of your death. Instead, this prediction is generally based on your current health and the average life expectancy for your given demographic.
What influences the value of my life insurance policy?
Many factors influence the current exchange value of your life insurance policy — for example, the total amount you are covered for, the amount (if any) of equity you have already accumulated, and the amount of premiums you still have 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 for it. 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 you need life insurance coverage is a personal choice based on the number of dependents you 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 other financial dependent will greatly influence the risks and benefits of selling your life insurance policy.
- Are my monthly payments worth the coverage I am paying? We all want to keep our monthly costs as low as is reasonably possible. If you don’t believe you are getting your money’s worth in coverage in exchange for the amount of premium you’re paying each month, then selling your policy might be a good idea.
- What other financial assets are 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 usually diversified. If this is important to you, then you may not want to have cash as your only financial asset.
- How much would it be worth to lose your life insurance coverage? This question essentially sums up all of the others. Ultimately, a life settlement (selling your policy) is going to give you money now in exchange for the benefits of your coverage in the future. Where to draw the line between what makes a good deal or a bad deal is up to you.
How much is my life insurance policy worth?
A number of factors will influence the cash value of your life insurance policy, so we can’t provide a definitive answer to that question without specific information from you. However, there are a few guidelines that can give you some 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’s worth $200,000, then you should be able to “cash out” for approximately $40,000-$50,000.
What is the best type of life insurance policy to sell?
The Life Insurance Settlement Agency (LISA) recognizes that institutions typically prefer to buy universal life insurance policies with benefits exceeding $100,000 from people who are older than 65. However, because there are people outside of those circumstances who want to sell their life insurance policies, there are an ample number of exceptions to those general rules of thumb.