Who Will Buy My Life Insurance Policy?
If you own a life insurance policy and need cash or no longer need the coverage, you may be able to sell it on the secondary market. This is typically done through a life settlement broker who will help you find a buyer for your policy. To sell your life insurance policy, it must have a “death benefit” – the amount of money paid out to your beneficiaries when you die.
| Types of Policies That Can Be Sold | Types of Policies That Cannot Be Sold |
|---|---|
| Whole life insurance policies | Group life insurance |
| Term life insurance policies | Government-issued and employer-provided life insurance |
| Universal life, indexed universal life, and variable universal life policies |
The most common reasons for selling a life insurance policy are the need for cash or no longer needing the coverage. When you sell your policy, you will receive a lump sum of cash, typically between 50% and 75% of your policy’s death benefit, and the remaining amount goes to the buyer for their commission. The amount of money you receive will depend on several factors, including the retained death benefit of your policy, the length of your term, and the life expectancy and health status of the insured.
To sell your policy, you must be the policy owner and be in good standing. You will need to find a buyer or broker interested in purchasing your policy and complete some paperwork to sign over the ownership of your policy. Before selling your policy to a viatical settlement company, read the terms and conditions carefully.
The main downside of selling your life insurance policy is that you will no longer have coverage. In addition, the sale of the policy may trigger a taxable event, and some policies have a clause that prevents you from selling the policy. Before selling your policy, be sure to do your research and ensure you get a fair policy price.
If you need cash and own a policy, you may be able to borrow against the policy or sell it for a lump sum of cash. However, if you surrender your life insurance policy, you will only receive the policy’s cash value.
Remember that the amount you can sell your policy will depend on the death benefit, policy type, and age. In general, you can anticipate receiving between 50% and 80% of your policy’s death benefit, with the remainder paid to the buyer for their commission.
