If you own a universal life insurance policy and no longer need the coverage, and you are wondering, “Can I sell my life insurance policy?” the short answer is yes (at least in many cases). Seniors and other eligible policyowners can sell a policy for a lump-sum payment through a transaction called a life settlement.
This guide explains who qualifies, how much you might receive, and how to sell a universal life policy safely and in an informed way.
What it Means to Sell Your Policy
A life settlement is the sale of a life insurance policy to a third party in exchange for a one-time cash payment. After the sale, the buyer becomes the new policyowner, takes over premium payments, and eventually collects the death benefit.
According to the Life Insurance Settlement Association (LISA), policyowners received $601 million through life settlements in 2024 $511 million more than they would have received by surrendering or lapsing their policies. This highlights the significant financial benefit of exploring settlement options.
For an overview of what it means to sell, see the NAIC consumer guide to life settlements, for more context on how these transactions work and common eligibility factors, review Harbor Life’s life settlements guide.
Who Qualifies to Sell a Universal Life Policy?
Eligibility depends on policy type, policy size, health, and state rules. Universal life is generally an eligible policy type. Offers are typically higher for larger face amounts and for insureds with shorter life expectancies. States also regulate providers and brokers to protect consumers. If you want a quick snapshot of typical requirements and licensing expectations, the Texas Department of Insurance publishes an overview for selling a life insurance policy.
Suppose you are living with a chronic or terminal illness. In that case, you may qualify for a viatical settlement, which often provides a higher payout because the buyer expects to pay premiums for fewer years.
How Much Can I Sell My Life Insurance Policy for?
There is no single number for how much a life settlement pays. Your offer depends on factors such as life expectancy, the premium costs the buyer must carry, and the policy’s death benefit. In general, settlement payments are more than the policy’s cash surrender value and less than the full death benefit. See NerdWallet’s explainer on how life settlement offers are determined.
Universal Life vs. Term Life
Universal life insurance is a permanent policy with cash value, making it a familiar candidate for life settlements. Term life usually has no cash value to “cash out,” although some term policies can be converted before sale. For a quick primer on why term policies generally cannot be cashed out, read Aflac’s overview of term life cash value. If you have term coverage, you may still have options. Learn when you can sell a term life insurance policy, including conversion timing.
How to Sell a Universal Life Policy
- Get a quick valuation. Use Harbor Life’s calculator to estimate your policy value, then discuss your goals. Start here: how to sell your life insurance policy.
- Confirm eligibility and documents. You will authorize the retrieval of policy and medical records so buyers can evaluate life expectancy and premium obligations.
- Close and fund. After the carrier’s ownership changes and escrow confirms, funds are released to you.
Consumer Protections and Your Rights
States require providers and brokers to be licensed and to give you the required disclosures. They may also set waiting periods, rescission windows, and privacy standards for your medical information. For practical tips on avoiding fraud and understanding the basics, see Connecticut’s consumer page on selling your life insurance policy.
Many states publish booklets that outline disclosures, tax considerations, and privacy rights in plain language. New York’s consumer information booklet is a good example of what to expect.
Some jurisdictions also clarify that a life settlement offer must exceed what you could receive from surrender or any accelerated death benefit available at that time. For example, Texas summarizes these requirements in its consumer materials and rule summaries for life settlements. You can review an agency notice that explains minimum value standards and licensing at a glance in the “Important Information” handout.
Taxes and Benefits to Consider
Proceeds from a standard life settlement may be taxable. The tax outcome can depend on your cost basis and the extent to which the payout exceeds premiums paid. Policies sold due to terminal illness may qualify for different tax treatment. Always speak with a tax professional.
Alternatives if You Still Need Coverage
If you still need some protection, ask your insurer about reducing the death benefit or removing riders to lower premiums. You can also compare surrendering and selling values. If you have a serious illness and need funds for care, review whether you qualify for viatical settlement options that are designed for chronic or terminal conditions.
Bottom Line
Can you sell a universal life insurance policy? Often, yes. A life settlement can unlock more cash than surrendering your policy, while eliminating future premiums. Weigh the tradeoffs, understand your state’s rules, and compare offers carefully if you want to see what your policy could be worth today. Request a free, no-obligation estimate.
