Can I sell my life insurance?
[social_share]Life insurance can be sold by the policy holder if it’s no longer needed. This won’t always occur, but it is relatively common.
Sometimes people will purchase life insurance at the beginning of a long term but then will find that they don’t need it before the end of this term. However, life insurance sometimes has value as the term end approaches, and so rather than simply getting rid of a life insurance policy, the original buyer can sell it.
The reason why life insurance policies become more valuable towards the end of the policy is that it’s usually charged at the same premium at the start as at the end. This means that the life insurance payments are front-loaded and so the policy becomes more valuable as the term progresses. If a policy holder is paying premiums on this type of life insurance towards the end of the term, then the premiums will be consistently lower than if the life insurance had been taken out for a shorter term, as there would not have been the front-loading. This gives value to that life insurance, even though there are premiums still left to pay.
Many life insurance providers offer the option of surrendering the policy in return for a sum of money. Because this allows the insurance providers to get rid of what has become a higher risk, they will usually calculate a cash value close to the amount that they expect to save. But they will often pay less than this amount, as the surrender is the more convenient option and the only one many policy holders are aware of.
Another option is to give the policy to a relative, who continues to pay the premiums in return for the ability to benefit from the life insurance via a cash payment.
Finally, it is possible to sell the life insurance policy on the open market, and this is often the way to get the best price. Such policies tend to be bought by brokers who then sell them on to investors.
