Selling a Term Life Insurance Policy: A Complete Guide for Policyowners
For many policyowners, selling a term life insurance policy becomes a practical and financially smart option when the coverage no longer fulfills its original purpose or becomes too expensive to maintain. Instead of letting the policy lapse with no return—or settling for a minimal surrender value—policyowners can unlock meaningful value through a life settlement.
By selling a term life insurance policy, many individuals receive a substantial lump-sum payment that can support medical needs, retirement planning, long-term care, or other financial priorities.
At Summit Life Settlements, we work closely with policyowners to evaluate eligibility, explain available options, and secure competitive offers through a transparent, consumer-first settlement process. Our industry expertise ensures you understand all your choices and feel confident at every step.
⭐ Why Consider Selling a Term Life Insurance Policy?
Policyowners choose to sell a term life insurance policy for a variety of practical and financial reasons, including:
No more dependents requiring financial protection
Premiums increasing or becoming unaffordable
Unexpected medical expenses or urgent financial needs
A desire to boost retirement cash flow
Concerns about losing years of paid premiums
A policy nearing expiration with no remaining benefit
Instead of allowing the policy to terminate without receiving anything in return, selling a term policy allows you to recover significant value and redirect those funds toward more important goals.
⭐ Term Policy Eligibility: Can You Sell a Term Life Insurance Policy?
Most term life insurance policies cannot be sold in their current form—but many become eligible through conversion.
✔ General Eligibility Requirements
To qualify for a life settlement, a term policy typically must meet at least one of the following:
It is convertible to a permanent policy (whole life or universal life)
It is renewable annually at an increased premium
The insured is generally age 65 or older, OR has experienced notable health changes
The policy’s death benefit is usually $100,000 or higher
✔ Why Convert a Term Policy?
Term insurance is temporary protection and usually has no cash value, making it unattractive to settlement buyers unless it is first converted into a permanent policy.
Conversion allows the policyowner to:
Preserve the original health rating—even if health has changed
Turn the policy into an asset that investors can buy
Create a permanent policy with no medical exam
Unlock significant cash value in the secondary market
✔ Why Conversion Is Often Worth It
Converting a term policy can transform a soon-to-expire asset into tens of thousands—or even hundreds of thousands—of dollars, depending on age, health, and policy size.
Many policyowners choose conversion because:
They cannot afford the new permanent policy long term
They do not need the coverage anymore
They want to avoid losing all value at expiration
A quick conversion can make a previously “worthless” policy eligible for a strong cash settlement.
Summit Life Settlements handles the entire process, including contacting the carrier, verifying conversion deadlines, and estimating potential settlement values.
⭐ How Selling a Term Life Insurance Policy Works
The process of selling a term policy is structured, secure, and designed to protect policyowners. At Summit Life Settlements, we simplify each step:
1. Policy Review
We evaluate your policy structure, death benefit, premiums, expiration date, and market potential.
2. Convertibility Check
Most term policies must be convertible before they can be sold. We verify your conversion rights, deadlines, and available permanent plans.
3. Market Evaluation
We assess:
Age
Health profile
Policy size
Premium requirements
Remaining term length
This determines the policy’s market value.
4. Free Cash Estimate
You receive a no-cost, no-obligation estimate showing how much your policy could be worth.
5. Documentation & Finalization
If you accept an offer, we handle all documents, coordinate with the carrier, and manage a compliant ownership transfer.
6. Receive Your Lump-Sum Payment
Once finalized, your settlement funds are paid directly to you and can be used for medical needs, retirement income, long-term care, debt payoff, or any financial goal.
This proven process ensures fairness, transparency, and protection at every stage.
⭐ How Much Can You Receive for a Term Policy?
Settlement payouts depend on several factors:
Age of the insured
Health status
Death benefit amount
Premium cost (after conversion)
Remaining term and lapse risk
In most cases, selling a term life insurance policy results in a payout far exceeding the policy’s surrender value—especially when the alternative is letting the policy expire.
⭐ Why Policyowners Trust Summit Life Settlements
Selling a term life insurance policy is an important financial decision. Policyowners choose Summit Life Settlements because we provide:
Transparent, honest communication
Unbiased guidance focused on your best outcome
Competitive bidding from licensed buyers
Personalized support throughout the entire process
Full confidentiality and strict regulatory compliance
Our goal is simple: help you secure the highest possible value from your life insurance asset while making the experience straightforward and stress-free.
Is Selling Your Policy the Right Move?
You may benefit from selling a term life insurance policy if:
You no longer need the coverage
Premium payments are financially burdensome
You need cash for medical or personal expenses
Your policy is convertible and meets eligibility criteria
You want to avoid losing your investment when the term expires
To learn more, explore our inbound resource:
👉 What Is a Life Settlement?
For a verified industry explanation of life settlements, you may also visit this helpful outside resource:
👉 Investopedia – Life Settlement Guide
FAQs About Selling a Term Life Insurance Policy
1. What types of term policies can be sold?
Most convertible term life insurance policies are eligible. A policy must be converted to a permanent plan before it can be purchased by an investor. If your term policy is not convertible, it generally cannot be sold unless you meet specific terminal illness criteria.
2. What does “convertible” mean?
Convertibility allows you to exchange your term policy for a permanent policy without a medical exam. This feature is essential because buyers only purchase permanent policies.
3. How do I know if my term policy is convertible?
Your policy contract will outline conversion privileges, including deadlines. If you’re unsure, Summit Life Settlements can contact your insurance carrier directly to confirm.
4. Why convert a term policy before selling it?
Investors can only buy permanent policies. Converting creates a new guaranteed benefit that buyers can invest in, allowing you to receive a lump-sum payout instead of letting the term policy expire worthless.
5. How long does the life settlement process take?
Most term life settlements take 3–6 weeks, depending on how quickly your insurance carrier provides documents and how long underwriting takes.
6. Is selling a term life insurance policy safe and regulated?
Yes. Life settlements are regulated transactions in most states. Policies are sold through licensed life settlement brokers and providers, ensuring consumer protection.
7. Are there any upfront costs?
No. There are no upfront fees for reviews, evaluations, or market bids. A broker is only compensated if a settlement closes.
8. Will selling my policy affect my ability to buy insurance in the future?
No. Selling your current policy does not prevent you from purchasing new coverage later.
9. How much could I receive for my policy?
Payout amounts vary based on health, age, premium costs, policy size, and conversion terms. In many cases, policyowners receive 4–8 times more than the surrender value or conversion credit.
10. What health conditions improve eligibility?
Life settlements are most valuable when the insured has experienced health changes since the policy was issued. However, some term conversions qualify even with minor or moderate impairments.
11. Do I need to have a serious illness to sell my term policy?
No. Severe illness is not required. Many policyowners qualify simply because of age, premium increases, or expiring term coverage.
12. Will my beneficiaries be affected?
Yes. Once sold, your beneficiaries will no longer receive the death benefit. Instead, you receive cash now and the buyer becomes the new beneficiary.
13. Are the funds I receive taxable?
Tax treatment varies based on basis, premiums paid, and policy type. Many policyowners qualify for favorable tax treatment, but a licensed tax advisor should confirm your individual situation.
14. Can I change my mind after accepting an offer?
Yes. Most states offer a rescission period—typically 15 days after receiving payment—allowing you to cancel the transaction and return the funds.
15. How do I get started?
A quick policy review is all that’s needed. Summit Life Settlements provides a free evaluation, verifies convertibility, collects necessary documents, and shops your policy for the highest value.
