Can I Sell My Term Life Insurance?

by | Jun 13, 2021 | Billsaver, Term Life Insurance

Can I sell my term life insurance policy? Can I cash my term life insurance?
Can I use my life insurance to pay off loans? We see these questions all the
time. When you start pouring hundreds of dollars into your life insurance
policy, it’s logical to wonder how you can get that money back. Luckily, we
have a few solutions you can look into.

Can I Sell My Term Life Insurance?

Unfortunately, there is no way to directly sell a term life insurance
policy. Unlike other forms of life insurance, term life carries no cash
value. The money that you put into your policy stays with the insurance
company. It’s not like a loan you’re paying off in exchange for a car. It’s
like the insurance you carry on the car. You wouldn’t try to sell your
health insurance or house insurance, would you? Term life fits that format.

With this in mind, there are a few ways you can get money from your term
life insurance policy if you no longer need it. Check out the next section
to learn more.

How Can I Get Money from Term Life Insurance?

In some cases, you can get money back from your term life insurance if you
cancel the policy altogether. This will only happen if you had a clause in
your policy that would allow you to get part of your money back. You won’t
get every dime you’ve ever put into the policy, but you will get some of the
money. The amount you get back will depend on how long you have had the
policy and how much your premiums are. Ask your insurance company about
“surrendering” your policy to learn more.

Another option to consider is life settlement. This usually only works for
older individuals who do not have long life expectancies. In the case of a
life settlement, you essentially sell your life insurance policy to a
company in exchange for cash. Then the company continues to pay your
premiums until you pass away. Once you die, the company will get your death

Life settlement is most often reserved for people 65 years or older who have
a life expectancy of 10-15 years or less. The policy must be worth over
$100,000. The money you get for your term life insurance policy will be
considered as taxable income, which means you will have to pay taxes on it
at the end of the year.

The reason some people choose life settlement over surrender is because life
settlement companies often offer more money for policies than insurance
companies will. If you have no surrender clause in your term life insurance
policy, this may be the only way for you to get money out of your life
insurance. Just keep in mind that your family will not get your death
benefit anymore. If that means you’ll be burdening someone else with burial
costs and leftover loans, you may want to weigh out your options.

Can I Sell Other Forms of Life Insurance?

You can sell whole life and universal life insurance policies because those
develop cash value. It’s essentially like selling stocks on the stock
market. You could do a life settlement like the option mentioned above, or
you could surrender the policy and get most of your money back. If you
didn’t want to get rid of the policy entirely, you could withdraw from it
like you would a bank account, or you could get a loan using your life
insurance as collateral. Once you pay the loan back, you get the policy
back. Then you can continue paying on it until you decide you no longer need

Should I Sell My Life Insurance?

If you have no family to give your death benefit to, cashing in your life
insurance may not be a bad idea. The whole point of life insurance is to
protect people who will have to cover your costs after you pass on. If you
don’t have anyone like that, you won’t need a policy. You could also
consider selling if you already have your burial costs paid for and your
debts covered. As long as you aren’t going to be a financial burden on
anyone else when you go, you can sell your life insurance.

Think about what whose life you would impact by selling your life insurance
policy, and you’ll be able to decide if this is the right step for you.