Can you sell your life insurance policy?

You can sell your life insurance policy with a life settlement (or viatical settlement) if you no longer need it or can't afford it. Your eligibility for a life settlement will depend on the type of policy, face value of the policy, policy owner's age, and policy's age.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

Full Bio →

Written by

Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

Full Bio →

Reviewed by Benji Carr
Former Licensed Life Insurance Agent

UPDATED: Dec 21, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right life insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance company and cannot guarantee quotes from any single company.

Our life insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

Quick Facts

  • You can sell your life insurance through a life settlement if you meet specific requirements set by a third party and your state
  • A life settlement can be beneficial for people who can no longer afford their policy and whose beneficiaries do not need the death benefit
  • Life settlements can be expensive and complicated, so exploring alternatives may be a better option for many people

Can you sell your life insurance policy? If you don’t need your life insurance policy anymore, it may be possible for you to sell the policy. While selling your life insurance policy may sound appealing, the process can be expensive and complicated, which may make alternatives more practical than a settlement. You should research life settlements thoroughly and consider meeting with a financial advisor before making any decisions.

Enter your ZIP code into our free quote comparison tool above to get life insurance quotes from companies near you.

Can you sell your life insurance policy?

Can you really sell your life insurance policy? You can sell your life insurance policy through a life settlement as long as you meet proper requirements. A life settlement is a right granted by the Supreme Court since the Grigsby v. Russell case in 1911.

The factors that determine eligibility for a life settlement include the type of policy, value of the policy, age of the policy owner, and policy age. Your policy must be a whole, convertible term, variable, or universal life insurance policy with a face value of at least $50,000-$100,000.

Depending on your state’s waiting period, you must have owned the policy for at least 2-5 years. In addition, the older the policy owner, the more likely they are to qualify for a life settlement.

Can you sell your life insurance policy if you are under 65? You may qualify for a life settlement while under 65, but it is more likely that you will be eligible if you are over 65.

Can you sell your life insurance policy if you have only had it for one year? Each state has a waiting period that determines how long you must have owned a life insurance policy before selling it. Waiting periods typically range between two and five years.

Can you sell your life insurance policy if you are not terminal? Yes, you can sell your life insurance policy if you are not terminal. However, you may receive more in a settlement if you are terminal.

Can you sell your term life insurance policy for cash? This depends on the terms of your policy. If your term life insurance policy is convertible to a whole life insurance policy, then you can sell it for cash.

Can you sell part of your life insurance policy? In general, you won’t be able to sell only part of your policy.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

How can you sell your life insurance policy?

A life settlement is sometimes called a viatical settlement. It occurs when you sell your life insurance policy to a third party for cash. Brokers and settlement companies are most likely to buy a life insurance policy. The third party then takes over the premium payments and receives the death benefit when you pass away.

You will have to meet the requirements listed above, but they may vary slightly based on your location and the third party you work with. For example, brokers and settlement companies are likely to offer you more if you are older or if your health is declining.

Should I sell my life insurance policy?

Selling your life insurance policy is a good option only for a few specific reasons. Suppose your beneficiaries rely on the death benefit to remain financially stable after your passing. In that case, you should keep the policy, but if your beneficiaries are no longer in need of the death benefit, selling may be worth it.

If you have a permanent life insurance policy that you can’t afford to keep, you may want to consider a life settlement. However, if you have term life insurance that you can’t afford, it may be easier to cancel the policy or let it lapse.

Finally, if you have enough money to self-insure, you could consider settling. If you’ve built up enough savings to support your beneficiaries after you pass, you may want to settle your life insurance policy so that you don’t have to keep paying for it.

With that in mind, a life settlement can be more expensive and complicated than most people think. It may be challenging to find a suitable offer since buyers want to make sure they’ll make a profit. In many cases, you may only receive 20% to 25% of the face value of your policy.

In addition to a low settlement, you may have to pay a fee of up to 30% of your payment to a broker. The income may also be taxable or affect eligibility for financial assistance.

What are the alternatives to selling my life insurance policy?

Most people find that alternatives to a life settlement are more manageable and sometimes more profitable than selling their life insurance policy. If you’re having difficulty affording your life insurance policy, there are ways to lower or get out of your premiums that don’t involve going through a lengthy selling process.

Some life insurance companies will allow policyholders to lower their coverage amounts, reducing their premiums. If this isn’t an option with your provider, you may cancel or surrender your policy. Term life insurance policies can be canceled or allowed to lapse without penalties.

If you have a whole life insurance policy, the policy can be surrendered (usually with fees) to receive some of its cash value. You may also borrow against the cash value or use it to pay the premiums if you don’t want to surrender the policy.

Many life insurance policies also include an accelerated death benefit (ADB) rider, which allows some policyholders to receive a portion of their death benefit before they pass away. In most cases, this is for individuals who are diagnosed with a terminal illness, but you can check the requirements with your life insurance company.

If none of the above options work for you, you could also use a 1035 exchange to trade your life insurance policy for a more affordable whole life policy or an annuity.

If you’re searching for more affordable life insurance rates, enter your ZIP code into our free quote comparison tool below to compare policies from companies in your area.

Ready to compare quick life insurance quotes?

Your life insurance quotes are always free.

 Secured with SHA-256 Encryption

QuickQuote is a BBB Accredited Business. BBB