Your life insurance policy is about to expire… Now what? You’ve spent years paying premiums...
Selling a term life insurance policy isn’t as straightforward as selling a permanent policy. Unlike whole or universal life insurance, most term policies don’t have built-in cash value. That doesn’t mean your coverage is worthless if you no longer need it. In some cases, policyholders can sell a term policy through a life settlement—unlocking real value from what otherwise might lapse or expire.
This guide will walk you through how the process works, when it’s possible, and the key considerations to keep in mind before you move forward.
The short answer: sometimes. Term policies generally can’t be sold unless they are convertible to a permanent policy. A conversion privilege allows you to change the term policy into a whole or universal life policy without new medical underwriting. Once converted, the permanent policy can be sold in the secondary market through a life settlement.
If your policy is not convertible, the options are limited. However, there are scenarios where a term policy may still hold value—especially if the insured has serious health impairments and the policy is nearing the end of its level premium term.
[Read more: Can a Term Life Insurance Policy Be Sold?]
Most term policies do not offer cash value or a surrender option. Unlike whole life insurance, which accumulates cash over time, term coverage is pure protection. The only way to “cash out” a term policy is to either convert and sell it through a life settlement, or—if you don’t qualify—to simply stop paying premiums and let the policy lapse.
[Read more: Can You Cash Out a Term Policy?]
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The value of a term policy in the settlement market depends on several factors:
Size of the death benefit (larger policies are more attractive to buyers).
Conversion privileges (a policy that can be turned into permanent coverage is more valuable).
Age and health of the insured (the shorter the life expectancy, the higher the potential settlement).
Premiums (lower premiums relative to benefit make the policy more marketable).
As an example, a $100,000 term policy with conversion rights may sell for a few thousand dollars, while larger policies can generate significantly higher settlements.
[Read more: How Much Can I Sell a $100,000 Term Life Policy For?]
While many investors focus on policies above $100,000 in face value, smaller policies can sometimes qualify. A $50,000 term policy may be sellable if the insured’s health condition creates meaningful value for buyers. Still, the pool of potential investors is smaller, and offers may be limited.
[Read more: Can I Sell My $50,000 Term Life Policy?]
Whether selling makes sense depends on your personal and financial goals. Policyholders who no longer need coverage, can’t afford premiums, or want liquidity for retirement often find that selling is better than letting the policy lapse. On the other hand, if your policy isn’t convertible or your health profile doesn’t meet investor criteria, a sale may not be possible.
[Read more: Is It Worth Selling a Term Policy?]
In almost all cases, no. That’s one of the defining differences between term and permanent life insurance. Term policies provide coverage for a set number of years and typically expire with no residual value. The exception comes when the policy has a conversion rider that allows it to be transformed into permanent insurance. Once converted, the policy can be sold, creating real value.
[Read more: Does a Term Policy Have Cash Value?]
If you live beyond the term period and never make a claim, your beneficiaries won’t receive a payout, and the premiums you paid are not refunded. For many families, this is still a worthwhile safety net during working years. But for older policyholders, it often feels like wasted money—one reason people explore selling their policies before expiration.
[Read more: What Happens If You Never Use Your Term Life Insurance?]
If you’re exploring whether your term life insurance has value, working with an independent life settlement broker can be the difference between walking away with nothing and securing the highest possible offer. A broker introduces your policy to a wide network of licensed buyers who compete to purchase it. This competitive process drives up the offers, ensuring you don’t settle for less than your policy is worth.
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