How Do I Sell My Life Insurance Policy? Your Comprehensive Guide

Feb 13, 2023 | Article, Guide

If you have a life insurance policy, you may be wondering if you’re able to sell it. Maybe you’re getting older or your finances have changed and you no longer want to make a monthly payment. Regardless of the reason, we’ve put together this comprehensive guide to answer important questions and educate you on the process.

Can I sell my life insurance policy?

As long as your policy meets certain specifications, then yes, it could be eligible for a life settlement.

What is a life settlement?

A life settlement is the process of selling your life insurance to a third-party investor for a one-time cash payout.

Did you know?

Approximately 10 million life insurance policies lapse each year because people don’t realize there’s a better solution.

Why would I want to sell my life insurance policy?

As your life changes, so may the need for your life insurance policy.

The most common reason someone would choose to sell their life insurance policy is that they need money. It could be due to a change in job status, unexpected expenses, no longer having dependents to support, foreclosure, to fund retirement, or something else.

Another reason someone would sell their policy is if they simply no longer need it due to age, a change in health status, or if they have other assets that can cover expenses.

Who can sell a life insurance policy?

If you are the owner of the policy and it is in good standing, you have the right to sell it. In order to qualify, the policy must have:

  • Been in force for at least two years, and
  • A death benefit of at least $100,000

The time requirement ensures people don’t take out life insurance policies just for the sake of selling them while the amount requirement ensures it’s a worthwhile investment for all parties.

These should be seen as general guidelines. Each policy and circumstance is unique.

Are life settlements legal?

Yes, life settlements are legal and regulated at the state level. Each state has different laws regarding guidelines and procedures.

Grigsby v. Russell

Did you know?

In 1911, The U.S. Supreme Court ruled that life insurance policies are a personal asset that are freely assignable for value just like any other asset.

What are the different types of life insurance settlements?

There are two settlement choices available:

Viatical settlement

This is an option for policyholders who have been diagnosed as terminally ill and have been given less than two years life expectancy.

You will typically get a higher payout for a viatical settlement.

Life settlement (sometimes called a senior settlement)

This is an option for policyholders who are at least 65 years of age.

Want to learn more?

How much can I get for my life insurance policy?

There are many factors used to determine how much you can get for your life insurance policy including age, health, and the value of the policy. The lump sum you receive will be less than your death benefit but higher than the surrender value. Typically, you can expect:


of your policy’s face value for a
viatical settlement, and


of your policy’s face value for a
life settlement

What are the pros and cons of selling a life insurance policy?

The major pro to selling your life insurance policy is that you receive a lump sum of money that can be used on whatever you want, relieving you of the monthly premium.

Drawbacks could include not getting as much as the death benefit and the fact that you’ll no longer be covered under the policy.

How do I sell my life insurance policy?

The basic steps to selling your life insurance policy are:

Make the decision that you want to sell your policy

Do you research and talk to your loved ones to ensure selling your policy is the right decision for you and your situation.

Find a life settlement company

There are various settlement companies out there. You’ll want to contact a couple to find the one that’s right for you.

How do you choose the settlement company that’s right for you?

The sale

The company you choose to work with connects you (the seller) with a buyer to pay an agreed upon sum and take over the policy. The buyer will then begin making the premium.

The death benefit is paid out

When the policyholder dies, the death benefit goes to the buyer instead of the original beneficiaries.

While it may seem complicated, this process can be made simple with the right life insurance settlement company.

Should I sell my life insurance policy?

Selling your policy can provide you with money when you need it while benefiting the buyer. However, only you can determine if it’s the right decision for you. You should carefully explore all options before moving forward in any direction. An experienced life insurance settlement company will ask you the right questions to guide you in the decision-making process.

I’m ready to sell my life insurance policy. What are the next steps?

If you are ready to move forward, see if your policy qualifies with PolicyBank®. Our team will work on your behalf to find a buyer for your policy and remain with you every step of the way.