Term Life Settlements · Free Check · No Obligation
Yes, a Term Life Insurance Policy Can Be Sold
Whether you can sell a term life insurance policy comes down to two things: whether it is convertible to a permanent policy, and your current health. If either works in your favor, your policy can likely be sold for a lump-sum cash payment instead of expiring worthless.
Conversion privileges expire, often at age 65 or 70. Checking costs nothing; missing the deadline costs everything. Reviewed by Jeff Hallman, Florida-licensed viatical settlement broker, License 0266.
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Which Life Insurance Policies Can Be Sold?
Here is the plain-English summary. Term life is the one type where the answer is "it depends," and the conversion privilege is usually what tips it to yes.
| Policy type | Can it be sold? |
|---|---|
| Convertible term life (within conversion window) | Yes, after conversion to permanent |
| Standard term life (no conversion option) | Sometimes, with a significant health change |
| Whole life | Yes |
| Universal life (UL, GUL, IUL) | Yes, the most common type sold |
| Variable universal life (VUL) | Yes, but offers tend to be lower |
| Group term life from an employer | Rarely |
Own a permanent policy instead? See the full guide to selling your life insurance policy.
The Two Ways a Term Policy Gets Sold
A buyer only purchases a policy when they expect to collect the death benefit before the coverage ends. With term life, there are two ways that math works in your favor:
Path 1 · Most common
Convertible term: convert, then sell
Many term policies include a conversion privilege: the contractual right to swap into a permanent policy with no new medical exam and no new health questions. A permanent policy has a death benefit that never expires, which makes it a real, sellable asset.
Your insurer must honor the conversion if you exercise it on time, even if your health has changed. A health decline since the policy was issued can actually increase what buyers will pay.
Path 2 · Less common, but real
Non-convertible term, with a health change
If your health has declined meaningfully since the policy was issued, especially with a chronic or serious condition, and there are enough years left in the level term, a buyer may purchase the term policy outright with no conversion.
The Illinois Department of Insurance puts it plainly: settlement providers "can buy almost any type of life insurance policy, including term, whole and universal life."
Not sure which path fits you? That is exactly what the free value check sorts out, or take the two-minute eligibility check.
The One Deadline That Decides Everything
Conversion privileges have a hard cutoff, and once it passes, the right disappears for good. Common limits:
- A specific age, often 65 or 70
- A set number of years from the policy start date
- Before the level-premium term ends, not after
If you do one thing this week, do this: call your insurance company and ask for your conversion deadline in writing. Then find out what the policy is worth before that date arrives. Both steps are free.
How a Convert-and-Sell Works
Four steps, typically 60 to 120 days from first call to funds in your account:
Find your conversion privilege and deadline
Look for a section titled "Conversion Privilege," "Conversion Option," or "Right to Convert" in your policy documents. If you cannot find the paperwork, call your insurance company and ask for the conversion deadline in writing.
Pre-qualify the policy before you convert
Have a licensed life settlement broker estimate the policy’s value based on your age, health, and policy terms before you commit. Permanent policy premiums typically run 5 to 15 times higher than term premiums, so you want to know the policy will sell before converting.
Convert the term policy
Exercise the conversion privilege through your insurance company. The new permanent policy uses your original health rating, with no new medical exam and no new health questions.
Let buyers compete, then close
A licensed broker shops the converted policy to multiple institutional buyers and presents every offer in writing. If you accept one, funds typically arrive within 30 to 60 days, and state law gives you a rescission period after closing.
Step 2 is the one people skip, and it matters most. Converting raises your premiums 5 to 15 times (Conning, 2025). Pre-qualifying first means you only convert if the settlement math actually works.
Want the stage-by-stage detail? See how the full selling process works.
How Much Can You Get for a Term Policy?
After conversion, settlements typically pay 10 to 25 percent of face value, about 20 percent on average. On a $500,000 policy, that can mean roughly $50,000 to $125,000. In 2025, buyers paid sellers $626.6 million across 2,955 transactions (LISA).
Remember the baseline: term life has zero cash surrender value. If you outlive the term without converting, the policy pays nothing, which is how an estimated 85 to 88 percent of life insurance policies end. Anything a buyer pays you is value that would otherwise vanish.
Example · Convertible term
Margaret, 73, owns a $500,000 convertible term policy expiring in three years. Her health has declined and she no longer needs the coverage. Letting it expire pays $0. Instead she converts, a licensed broker runs competitive bidding, and she nets about $95,000 after commissions.
Example · Non-convertible term
Robert, 76, owns a $300,000 non-convertible term policy with 12 years remaining. After a serious diagnosis, his life expectancy falls well inside the remaining term, so the buyer math works without conversion. After bidding, he receives about $40,000 after commissions.
Examples are illustrative and consistent with industry averages. Individual results vary, and not every policy receives an offer. See what drives a policy's value.
Non-Convertible Term: A Realistic Qualification Guide
These are guidelines, not rules. The only reliable way to know is to have a licensed broker run the numbers, which costs nothing.
| Age | What it usually takes to qualify |
|---|---|
| Under 65 | Typically a life-threatening or terminal diagnosis (a viatical settlement) |
| 65 to 74 | A serious health impairment since the policy was issued |
| 75 to 79 | Chronic health conditions may be enough |
| 80 and over | Qualification is more likely; the offer depends heavily on premium costs |
In every case, the remaining level term must be longer than the buyer's life expectancy estimate. That is the math a broker checks for you.
If Your Term Policy Does Not Qualify
An honest note: not every term policy can be sold, and you should hear that from us rather than find out after weeks of paperwork. If yours does not qualify, you still have real options:
- Check for an accelerated death benefit (ADB) rider. Many term policies pay part of the death benefit early after a terminal or chronic illness diagnosis. Call your insurer to confirm.
- A viatical settlement, if illness is terminal. These apply to most policy types including term, and proceeds are usually federally tax-free. See life settlements vs. viatical settlements.
- Sell a different policy you own. A whole life or universal life policy may be sellable on its own, even if the term policy is not.
- Let it expire, without guilt. If the policy protected a mortgage or young children, it did its job. There is no penalty for letting it end.
One more practical note: when a sale does go through, proceeds may be partly taxable under the IRS three-tier framework, and even term policies have a tax basis equal to the premiums you paid (Revenue Ruling 2020-05). The details are in our plain-English tax guide.
Frequently Asked Questions
Can you cash out a term life insurance policy?
No. Term life insurance has no cash value to withdraw. But you can sometimes sell a term policy through a life settlement: convertible term qualifies after it is converted to a permanent policy, and non-convertible term can sometimes be sold if your health has changed significantly since the policy was issued.
Can I sell my term life policy without converting it?
Sometimes, yes. Non-convertible term is harder to sell than convertible term, but it can still qualify if your health has changed meaningfully since the policy was issued and the remaining term is long enough. A buyer needs to expect to collect the death benefit before the policy expires, so life expectancy compared with remaining term is the key factor. Per the Illinois Department of Insurance, viatical settlement providers can purchase almost any policy type, including term.
How much can I get for selling a term life policy?
After conversion to a permanent policy, settlements typically pay 10 to 25 percent of the face value, with the industry average around 20 percent. On a $500,000 policy that can mean roughly $50,000 to $125,000. The actual figure depends on age, health, and the new permanent policy’s premiums.
What is the conversion deadline on most term policies?
It varies by policy. Common limits are a specific age (often 65 or 70), a set number of years from the start of the policy, or before the level-premium term ends. Your insurance company can confirm your exact deadline in writing.
Can I sell my term life policy if I am under 65?
Usually only if you have a serious or terminal illness, through a viatical settlement. Standard life settlements typically require the insured to be at least 65, and most closed transactions involve insureds in their 70s and 80s.
How long does the convert-and-sell process take?
From first call to funds in your account, the process typically takes 60 to 120 days. Conversion paperwork takes the longest. Once converted, most settlements close within 30 to 60 days of accepting an offer.
More questions? See the full FAQ or our overview of which policies qualify.
Check Your Term Policy Before the Conversion Window Closes
The check is free, it takes about two minutes, and you are under no obligation. If your policy qualifies, a licensed broker makes buyers compete for it; commissions come out of the proceeds only if you choose to sell.
Sources
- Life Insurance Settlement Association (LISA), 2025 Annual Market Data (released May 19, 2026): $626.6 million paid to consumers across 2,955 transactions; typical payouts of 10 to 25 percent of face value.
- Illinois Department of Insurance, Viatical Settlements consumer guide: settlement providers can purchase almost any policy type, including term.
- Conning, 2025 Life Settlements Strategic Study: permanent policy premiums typically 5 to 15 times higher than term premiums after conversion.
- IRS Revenue Ruling 2009-13 and Revenue Ruling 2020-05: tax treatment of settlement proceeds, including the tax basis of term policies.
- NAIC Viatical Settlements Model Act and state insurance department consumer guidance (Texas Department of Insurance; New York Department of Financial Services).
This page is educational and is not financial, tax, or legal advice. Eligibility, payouts, tax treatment, and regulations vary by state and individual circumstances. Converting a term policy raises premiums significantly; pre-qualify before converting. Proceeds may be taxable in part and can affect eligibility for need-based programs such as Medicaid. Consult a licensed tax professional, attorney, or benefits counselor before making decisions about your policy. Individual results vary; there is no guarantee that every applicant receives an offer. Last reviewed June 10, 2026.