Can You Sell a Term Life Insurance Policy? A Complete Guide for Policyholders
Most people purchase term life insurance for protection during key stages of life — to cover a mortgage, replace income, or ensure family security. But what happens when those needs change or the policy is no longer affordable? Many policyholders don’t realize that their term life insurance could still hold hidden value — even if it’s approaching expiration.
In many cases, a term life policy can be sold through a transaction known as a life settlement — allowing you to turn an unwanted or soon-to-expire policy into immediate cash. This option can provide valuable financial flexibility, whether you need funds for healthcare, retirement, or simply want to stop paying premiums for coverage you no longer need.
In this complete guide, we’ll explain when and how you can sell a term life insurance policy, what makes a policy eligible, and how working with a licensed life settlement broker can help you maximize your payout. You’ll also learn the key differences between keeping, surrendering, or selling your policy — so you can make the most informed decision possible.
Why Sell a Term Life Insurance Policy?
Term life insurance is designed to offer coverage for a fixed number of years — often 10, 20, or 30. But life changes. Children grow up, financial priorities shift, and the original purpose of your policy may no longer apply. If you’re paying premiums for a policy you don’t plan to use, selling it could turn an unused asset into a lump sum payment.
Many people exploring this path are asking: Can you sell a term life insurance policy? The answer depends on the structure of your policy and your personal circumstances — but for thousands of policyholders, the answer is yes.
When Is Selling a Term Life Insurance Policy Possible?
The key factor that determines if you can sell your policy is convertibility. A convertible term life insurance policy includes a clause that allows you to convert it into permanent insurance — without having to requalify medically. Once converted, that policy can then be sold on the secondary market to licensed institutional buyers.
Other common requirements include:
- You are typically age 65 or older
- The policy’s death benefit is at least $100,000
- Your health status has changed since the policy was issued
- The policy has not yet expired
If your term life policy is not convertible, it likely cannot be sold. But if it is — and you meet these basic requirements — it may be worth a surprising amount of money.
What’s the Process for Selling a Term Life Insurance Policy?
Once you determine that your policy is convertible and qualifies, here’s what the selling process generally looks like:
- Review Your Policy – An expert helps you determine if your term policy can be converted and sold.
- Submit Documents – You’ll provide basic health and policy information for a professional appraisal.
- Marketplace Listing – Your policy is listed on a bidding platform, where licensed buyers compete for it.
- Choose the Offer – You’re presented with multiple bids and can choose the highest or most suitable one.
- Close the Sale – Once accepted, the paperwork is finalized, and the ownership of the policy is transferred.
- Get Paid – After closing, funds are sent to you directly — often within days.
At Summit Life Settlements, this process is simple, fast, and handled with care to ensure every client understands their options and receives maximum value.
How Much Is Your Policy Worth?
While each policy is unique, several factors help determine how much you could receive:
- Age and health of the insured
- Death benefit size
- Annual premiums
- Type of policy once converted
- Life expectancy and underwriting
To get a rough estimate, many start with a sell term life insurance policy calculator. These tools can give you a quick range based on standard inputs. However, nothing replaces a custom appraisal by specialists who understand your exact policy and market conditions.
We recommend starting with a no-cost, no-obligation review — which you can request directly from Summit Life Settlements.
Real-Life Example
Let’s say Bob, 70 years old, has a $250,000 term policy that is convertible for the next 6 months. He no longer needs the policy, and the premiums are becoming burdensome. Bob contacts a settlement advisor, converts his term policy, and lists it on a competitive bidding marketplace.
After a short evaluation, Bob receives multiple offers and chooses one worth $50,000 — significantly more than the policy’s surrender value of $0. He walks away with cash in hand and no further premium payments.
Why Choose Summit Life Settlements?
Selling a policy is a major decision. That’s why working with a trusted partner matters. Summit Life Settlements provides:
- Access to multiple institutional buyers, not just one
- A simple and guided process
- Free, no-risk policy reviews
- Full transparency with no hidden fees
Our team is committed to helping clients navigate the life settlement market, understand their options, and make confident financial decisions. Whether you’re considering your first sale or just want to explore your policy’s value, we’re here to help.
Final Thoughts
Many seniors lapse or surrender their term life policies without realizing there may be another option. If your policy is convertible and you meet basic eligibility, selling a term life insurance policy could provide a significant financial boost — and peace of mind.
Don’t let your policy expire without exploring what it might be worth.
Contact Summit Life Settlements to learn more, or request a free estimate today.
Frequently Asked Questions: Selling a Term Life Insurance Policy
1. Can I sell a term life insurance policy?
Yes — but only under certain conditions. You can sell a term life policy through a life settlement if it’s convertible to a permanent policy such as universal or whole life. Conversion gives the policy lasting value that buyers can invest in. If your term policy cannot be converted, it usually has no market value after the term expires.
2. What does “convertible” term life insurance mean?
A convertible term policy allows you to change your temporary term coverage into a permanent life insurance policy without new medical underwriting. This conversion feature is what makes your term policy eligible to sell — because permanent policies accumulate value and don’t expire.
3. Why would someone sell a term life policy?
Many people sell their term life policy when:
The policy is no longer needed (for example, after a mortgage is paid off or children are grown)
Premiums are becoming too expensive
They want to access cash now instead of letting the policy lapse
They’re unable to convert the policy affordably and would rather benefit from its value today
A life settlement can turn an expiring or unwanted policy into immediate funds.
4. Who qualifies to sell a term life insurance policy?
Generally, sellers are 65 or older, or younger individuals with serious health conditions. The policy must typically have a death benefit of $100,000 or more and be convertible to permanent coverage. The closer a policy is to its conversion or expiration date, the more time-sensitive the opportunity becomes.
5. How much can I get for selling my term policy?
The value depends on your age, health, policy size, conversion options, and premium costs. Once converted to permanent coverage, your policy is appraised and presented to institutional investors. On average, a life settlement payout is 4–10 times higher than the policy’s surrender value (if any).
6. What’s the process for selling a term life policy?
The process generally includes:
Review & eligibility check – A broker reviews your term policy and conversion options.
Policy conversion – If eligible, the term policy is converted to permanent coverage.
Market bidding – The broker shops your converted policy to multiple institutional buyers.
Offer selection & closing – You review offers and accept the best one. After the sale closes, you receive your cash payment.
7. How long does it take to sell a term life policy?
Most transactions take about 6 to 10 weeks. Timing depends on how quickly the conversion paperwork and medical reviews are completed and how long buyers take to finalize offers.
8. Are there fees or obligations to start the process?
No. With Summit Life Settlements, there are no upfront fees and no obligation to move forward. We provide a free policy review and only earn a commission from the buyer if your policy successfully sells.
9. What happens after I sell my policy?
Once the sale is complete, the buyer takes over all future premiums and becomes the new owner and beneficiary of the policy. You’ll receive your lump-sum cash payment and have no further financial obligations tied to the policy.
10. Will selling my term policy affect my taxes or benefits?
Some proceeds from a life settlement may be taxable, depending on how much you’ve paid in premiums and the policy’s value at the time of sale. In addition, the payout could affect needs-based benefits like Medicaid. Always consult a tax or financial advisor before finalizing a sale.
11. Is the process regulated?
Yes. Most states have life settlement laws that protect policyholders by requiring brokers and buyers to be licensed and transparent about the process and offers. Summit Life Settlements operates under these regulations to ensure fairness, confidentiality, and compliance.
12. Why should I use a broker like Summit Life Settlements?
A broker works exclusively for you, the policyholder — not the buyers. Summit Life Settlements uses a competitive bidding process to present your policy to multiple institutional investors, ensuring you receive the maximum possible value. We provide full transparency, expert guidance, and dedicated support every step of the way.
