Can you sell your life insurance policy? In many cases, yes. If you are generally 65 or older and your policy has a death benefit of at least $100,000, there is a good chance it qualifies to be sold for a lump-sum cash payment. It is called a life settlement, and when a policy qualifies it usually pays far more than what the insurance company would give you to cancel it.
According to a LISA survey, 55% of seniors aged 65 and older do not even know this is an option. The result: every year, hundreds of thousands of seniors let policies lapse or surrender them for pennies on the dollar, not because they want to, but because nobody told them there was another way.
This guide answers the questions people actually ask before they sell: whether you can, how much you can get, whether you should, who buys these policies, and how the whole thing works.
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Can you sell your life insurance policy?
In most cases, yes. The general eligibility looks like this:
- Age: The insured is typically 65 or older (younger applicants with significant health changes may still qualify)
- Policy type: Universal life, whole life, variable life, or convertible term life
- Face value: Most buyers look for a death benefit of $100,000 or more
- Health: Any change in health since the policy was issued generally increases the policy’s value
A common myth is that you have to be seriously ill. That is not true. You just need a qualifying policy and a reason you no longer want or need the coverage. If you want to check your specific situation, our Can I sell my life insurance policy? page walks through qualification in detail.
We hear the same reasons over and over from the families we work with: the kids are grown and the mortgage is paid off, so the death benefit no longer serves its original purpose. Or premiums have crept up to the point where they squeeze a fixed retirement budget, especially for seniors over 70 when the cost of keeping a policy climbs steeply. Some folks would simply rather have the cash now, for medical bills, long-term care, home modifications, or travel. And many come to us because a policy is about to lapse and they would hate to walk away with nothing after paying premiums for decades.
What does it mean to sell your policy?
Selling your life insurance policy means transferring ownership to a third-party buyer in exchange for a lump-sum cash payment that is more than the cash surrender value but less than the death benefit. After the sale, the buyer pays the future premiums and receives the death benefit later. You walk away with cash today and no more premium bills.
This is what the industry calls a life settlement. It is a regulated transaction in most states, with licensing requirements, written disclosures, and a rescission period that lets you change your mind. For a fuller explanation, see what is a life settlement.
How much can you sell your policy for?
Every policy is different, but these ranges give you a realistic ballpark:
| Measure | Typical figure |
|---|---|
| Average payout | About 20% of face value |
| Typical range | 10% to 25% of face value (more for shorter life expectancies) |
| Higher-end cases | 50% or more for insureds with serious health conditions |
| Versus surrendering | In 2025, settlements averaged $212,066 vs a $24,360 surrender value, nearly 9× (LISA) |
A few worked examples, using the typical 10% to 25% range:
- A $100,000 policy often sells for roughly $10,000 to $25,000
- A $250,000 policy often sells for roughly $25,000 to $60,000
- A $500,000 policy often sells for roughly $50,000 to $125,000
Your actual number depends on the insured’s age, health, policy type, and the premiums required to keep the policy in force. For a deeper breakdown, see average life settlement offers and how to get more, or estimate your own policy with our how much is my policy worth guide.
The best way to know what your specific policy is worth is to get an estimate. It is free, it takes a few minutes, and there is no obligation.
Should you sell your life insurance policy?
Selling is not the right move for everyone. Here is an honest look at both sides.
- The coverage is no longer needed: kids grown, mortgage paid, spouse provided for
- The premiums have become a burden on a fixed income
- You would otherwise let the policy lapse or surrender it for very little
- You need cash now for medical bills, long-term care, or retirement
- Your health has declined, which can mean a higher offer
- Your family still relies on the death benefit
- The premiums are still affordable and the coverage still fits your plan
- The proceeds could affect need-based benefits like Medicaid
- A portion of the proceeds may be taxable
- You have not yet compared the offer to simply keeping the policy
A good fiduciary broker will tell you if selling is not in your interest. If the numbers do not work or the coverage still serves your family, the honest answer is to keep the policy, and you should expect to hear that. Because selling can touch your taxes and benefits, it is worth a quick conversation with a tax professional or benefits advisor before you decide.
Who buys life insurance policies?
The actual buyers are large institutional investors: pension funds, hedge funds, and licensed life settlement providers. They buy policies as a long-term investment.
Here is the part that matters most for your payout: you should not go to these buyers directly. There are two paths, and they lead to very different results.
- You get a single take-it-or-leave-it offer
- That company profits by paying you as little as possible
- You have no way to know if the number is fair
- No one is representing your interests
- The broker legally represents you, the seller
- Your policy is shopped to many buyers at once
- Buyers compete, which drives the price up
- Commissions come out of the proceeds and are disclosed upfront
We cannot stress this enough: work with a broker, not a direct buyer. We have seen the difference run to $30,000, $50,000, or more on the same policy. Think of it like selling a house. One offer is just one number. Five or six offers competing against each other is how you find out what something is really worth. For more on the companies in this space, see our guide on how to choose a life settlement company.
What to look for in a broker:
- Licensed in your state as a life settlement broker
- Fiduciary obligation to act in your best interest
- Does not buy policies themselves, which would be a conflict of interest
- Transparent about fees, with commissions disclosed before you agree to anything
- No upfront costs, ever, to explore a life settlement
How selling your policy works
The full process takes about 60 to 90 days from first call to cash in hand. Here is the short version. For a complete walkthrough of each stage, see our step-by-step guide on how to sell your life insurance policy.
- Confirm you qualify. A free review of your age, policy type, face value, and health.
- Choose a fiduciary broker. Someone who represents you, not a buyer.
- Submit your policy information. Policy type, face value, issuer, date of birth, and general health. This first look is free and takes a few days.
- Life expectancy underwriting. Independent firms estimate life expectancy from your medical records. No medical exam. About two to three weeks.
- Marketing and bidding. Your broker invites competing offers from institutional buyers. About two to four weeks.
- Review your offers. You see the cash amount, the commissions, your net proceeds, and the buyer for each offer. You are never obligated to accept.
- Close and get paid. You sign the transfer paperwork, funds go through escrow, and payment usually arrives within two to four weeks of accepting an offer.
After closing you have no further obligations. The buyer pays all future premiums, you receive your cash, and you are done. You will want to speak with a tax professional about your proceeds before tax season.
Common mistakes to avoid
- Letting a policy lapse without checking its value. Industry data shows 85 to 88% of life insurance policies never pay a death benefit. If you stop paying and the policy lapses, you get nothing. Check the market first.
- Surrendering to the insurer without exploring alternatives. The cash surrender value is almost always the lowest payout option. Understand the difference between a life settlement and surrendering first.
- Selling direct to a buyer without a broker. A single buyer has no incentive to offer a fair price. A broker creates competition.
- Waiting too long on a convertible term policy. The conversion option can expire, after which the policy may be worthless. Learn about selling a term life policy and check your deadline.
Frequently asked questions
Can I sell my life insurance policy for cash? Yes. If the insured is generally 65 or older and the policy has a death benefit of at least $100,000, it often qualifies to be sold for a lump-sum cash payment through a life settlement. The buyer takes over the premiums and receives the death benefit later. You receive cash now, almost always far more than the policy’s cash surrender value.
How much can I sell my life insurance policy for? The average life settlement pays about 20 percent of the policy’s face value, so a $500,000 policy might return around $100,000. Most standard cases fall between 10 and 25 percent, and payouts can reach 50 percent or more for insureds with shorter life expectancies. In 2025, LISA reported an average payout of $212,066, nearly nine times the $24,360 average cash surrender value.
How much can you sell a $100,000 life insurance policy for? As a rough guide, a $100,000 policy commonly sells for somewhere between $10,000 and $25,000, and more if the insured’s health has declined significantly. The exact figure depends on age, health, policy type, and the premiums needed to keep the policy in force. The only way to know your number is a free estimate.
At what age can you sell your life insurance policy? Most buyers look for an insured who is 65 or older. Younger policyholders can sometimes qualify if they have a serious or chronic health condition, which is usually handled as a viatical settlement rather than a standard life settlement.
Who buys life insurance policies? Policies are purchased by institutional buyers such as pension funds, hedge funds, and licensed life settlement providers. You should not approach these buyers directly. A fiduciary broker represents you and makes these buyers compete, which is how sellers typically get a higher offer.
Is it a good idea to sell your life insurance policy? It often makes sense when the coverage is no longer needed, the premiums have become a burden, or you would otherwise let the policy lapse or surrender it for little. It may not make sense if your family still depends on the death benefit. Because the proceeds can affect taxes and need-based benefits, it is worth speaking with a professional before you decide.
Will selling my policy affect my taxes? It can. Under current IRS rules, proceeds up to the total premiums you paid generally come back tax-free, and amounts above that may be taxed as ordinary income or capital gains. Speak with a tax professional about your specific situation before tax season.
Does it cost anything to find out what my policy is worth? No. A reputable broker reviews your policy and gives you an estimate at no cost, and the broker’s commission only comes out of the sale proceeds if you decide to sell. You should never pay anything upfront to explore a life settlement.
Your next step
It comes down to a few questions: do you qualify, is the coverage still needed, and do the numbers make sense for your life. The way to answer the money question is to get a real estimate and let a fiduciary broker put your policy in front of competing buyers.
There is no cost to find out. The broker’s commission comes out of the sale proceeds only if you decide to move forward. You never write a check.
Citizens Life Group helps seniors get the most from policies they no longer need. Get a free estimate or call (321) 270-0279 to talk with our team.
Sources
- Life Insurance Settlement Association — Awareness Survey — Source of the finding that 55% of seniors aged 65+ are unaware that life settlements exist as an option.
- Life Insurance Settlement Association — 2025 Annual Market Data — Reports an average life settlement payout of $212,066 versus a $24,360 average cash surrender value, nearly 9 times more (released May 19, 2026). The basis for the payout figures cited above.
- NAIC Life Settlement Model Act (MDL-697) and NCOIL Life Settlements Model Act — The two model acts most state life settlement statutes follow, covering licensing, disclosures, rescission periods, and broker fiduciary duty.
- Securities and Exchange Commission — Investor Bulletin on Life Settlements — Plain-language guidance on what sellers should expect and red flags to watch for.
- Internal Revenue Service Revenue Ruling 2009-13 and Revenue Ruling 2020-05 — Federal tax framework that determines the seller’s after-tax net from a life settlement.
- Florida Statutes Chapter 626 Part X (Viatical Settlement Act) — Florida’s home-state statute, representative of the protections a seller receives in regulated states.