Can I Sell My Term Life Insurance Policy for Cash?

Selling life insurance policies is possible in some situations. However, to sell a life insurance policy that is a term policy is far more difficult. Here's how to make it possible.

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Can I Sell My Term Life Insurance Policy for Cash?

Many people want to know if they can sell their term life insurance policy and turn in all that they have invested back in to the company to get cash in hand. There are some instances when selling life insurance is possible, but there are also numerous limitations to this. For those with a term life insurance policy, getting cash for it can be hard to do and requires a few big steps to make it possible.

Is Selling Term Life Insurance as It Is Possible?

Term life insurance is a type of policy that does not offer any long-term buildup of value. By comparison, a permanent or whole life insurance policy will gain cash value over time. With each payment, a portion goes towards building the underlying cash assets of the policy. As you make policy payments, that value rises year after year, especially if the underlying investments do well on the market. However, term life insurance does not have this benefit. Every payment you make towards the plan goes to pay for the death benefit that is paid out should you die while the policy is in place. For this reason, converting a term life insurance policy into cash is not easily done.

Selling Life Insurance By Converting a Term Policy Into a Whole Life Policy

In some situations, it is possible to sell your term life insurance policy if you are able to convert it to a whole life insurance policy. Some life insurance companies will allow you to convert your existing term life policy into a whole life policy if you are still young and healthy. The company is not going to allow you to make this conversion just so you can sell the policy though. Rather, they will do so if they believe you plan to keep the policy long term.


However, if you can convert it and maintain it for a short period of time, you may then be able to sell your life insurance to a third party who will be able to cash it out for you. Keep in mind that selling your life insurance policy to a third party is never an ideal situation. While it can provide you with cash in hand to use as you need to, most of the time, you will not get much for it. Sometimes, you may receive a life insurance settlement of just 20 percent of the face value of your policy. There are some situations where you can receive more, but this is usually no more than about 50 percent.

Should You Sell a Life Insurance Policy or Keep It?

Keep in mind that the longer you maintain your life insurance policy, the better for you long term. Remember the benefit of having life insurance, especially a term life insurance policy is to provide your family with financial protection should something happen to you. As a result of this, maintaining that policy can be vitally important to you. Also, note that it can also be hard to obtain a new life insurance policy at the rates you have now. If you are now older or perhaps you are no longer as healthy as you once were, this can mean that you are paying extensively for life insurance now if you choose to buy a new policy.

Selling Your Life Insurance Policy Can Solve Some Financial Hardships

However, for those facing financial hardship, selling your life insurance policy can be important to you. It may allow you to get the funds you need right now to pay for your medical needs as well as any other needs you have. Every situation is different. Only you can determine if selling is right for you.

Before You Sell Your Life Insurance, Consider a Bit of Info

If you convert your term life insurance policy to a whole life insurance policy and maintain it over time, you will build up a cash value. Many whole life insurance policies will allow you to borrow from them, which means you are not closing the account but still gain some access to the funds you may need.