Can You Sell Term Life Insurance?
Term life insurance provides coverage for a specified period of time and offers a death benefit during that period. It is designed to provide financial protection to beneficiaries against the insured person’s loss of life. Term life is an affordable way to cover the cost of final expenses and financial obligations. The policy provides no cash value apart from the death benefit. But can you sell term life insurance?
Types of Term Life Insurance Policies
| Level-Term Life Policies | Decreasing-Term Life Policies |
|---|---|
| Pay a fixed death benefit for the duration of the policy | Death benefit decreases over the policy term |
| Premiums remain constant throughout the policy term | Premiums remain constant throughout the policy term |
If the insured person dies within the specified term of the insurance contract, the policy owner’s beneficiary receives a cash benefit that equals the face value of the policy. However, if the policy owner outlives that contract term, there is no benefit payout.
Selling a Term Life Insurance Policy
Yes, you can sell a term life insurance policy for cash, but it will usually have much more value on the market if it is the type that can be converted to a whole or universal life policy. The provision in a term life policy that allows for this change is called a conversion rider. You can exercise your option to convert without an additional medical exam to determine your health condition. The face value of your policy will typically stay the same when it’s switched, but your premiums will go up in light of the cash-building benefit of the new permanent policy.
Making a Life Settlement by Selling Your Life Insurance Policy
Once a term life insurance policy is converted to a permanent policy, it’s possible to make a life settlement, which is the sale of a life insurance policy for cash. In this transaction, the seller receives a cash payment that is greater than the cash surrender value of the policy but less than its death benefit. You must be at least 65 to be eligible for a life settlement, and some life settlement companies require you to either be age 70 or older or have a severe medical condition. A life settlement company will underwrite your policy and present it to brokers who obtain offers for the policy from prospective buyers. With a settlement organized by Harbor Life, you can get up to 40% of your policy’s value in cash in as little as 10 days.
Conclusion
If you don’t need life insurance protection for your survivors, converting your term life policy to a permanent policy and selling it can be a good way to generate cash for your retirement or for covering your medical or long-term care expenses. A financial advisor can help you consider your personal financial needs and goals, weigh your options, and make the best decision for you and your family.
