Thinking about “How to sell my life insurance policy?” A life settlement lets eligible policyowners sell an existing policy to an institutional buyer for more than the cash surrender value. Proceeds can pay medical bills, retirement expenses, or simply improve quality of life. At Diversified Insurance Brokers, we explain your options, shop multiple buyers, and help you compare a life settlement to alternatives—so you can decide with confidence.

        

What Is a Life Settlement?

  

A life settlement is the sale of an in-force life insurance policy by the policyowner to a licensed third-party buyer. In exchange, you receive a lump sum that’s typically higher than the policy’s cash surrender value but lower than its death benefit. After the sale, the buyer becomes the new owner, pays the premiums, and collects the death benefit in the future.

  

Who Typically Qualifies?

  

    
• Age & health: Many sellers are age 65+ or have experienced a significant health change.
    
• Policy types: Universal life, whole life, variable universal life, and some term (if convertible).
    
• Death benefit size: Often ≥ $100,000 (larger face amounts tend to attract stronger offers).
    
• Premiums: Reasonable ongoing premium requirements relative to the policy’s face amount and expected life expectancy.
  

  

Not sure if you’re eligible? We’ll review your policy, premiums, and health history to estimate potential value—without obligation.

  

How Selling Your Policy Works (Step-by-Step)

  

    
1. Policy review: We collect policy details (type, face amount, premiums, riders) and current in-force ledgers.
    
2. Health assessment: Buyers typically request medical records or a brief health summary to evaluate life expectancy.
    
3. Market the policy: As an independent brokerage, we solicit offers from multiple licensed buyers to help you get the best price.
    
4. Offers & negotiation: We compare bids, fees, and escrow terms side-by-side and negotiate on your behalf.
    
5. Contract & escrow: If you accept an offer, documents are signed and held in escrow; the buyer verifies policy ownership and status.
    
6. Funding & transfer: You receive funds from escrow; ownership and beneficiary changes are recorded with the carrier.
  

  

What Affects Your Payout?

  

    
• Age & health: Shorter life expectancy typically increases offers.
    
• Policy design: Face amount, cash value, and policy type (UL, WL, VUL, convertible term).
    
• Premium load: Lower required premiums improve buyer economics and potential payout.
    
• Carrier strength: Financial ratings and contract provisions can influence bids.
  

  

Pros & Considerations

  

    
• Pros: Immediate cash; often more than surrender value; no more premiums; flexibility to use funds as you wish.
    
• Considerations: Heirs won’t receive the death benefit; offers vary by buyer; potential tax implications; medical privacy releases are typically required.
  

  

Alternatives to Selling Your Policy

  

    
• Keep the policy: Maintain coverage for heirs or charitable goals.
    
• Reduce coverage or premiums: Ask about face amount reductions or premium optimization.
    
• Policy loan or withdrawals: Access cash value within contract rules.
    
• Accelerated death benefit: If you meet qualifying conditions built into your policy.
    
• 1035 exchange: Consider exchanges into different policies or certain annuities (seek tax advice).
  

  

Real-World Example

  

A 78-year-old with a $500,000 universal life policy was paying $9,000/year in premiums. The cash surrender value was only $18,000. After marketing to several buyers, the client received a $120,000 life settlement offer—over 12× the surrender value—and eliminated future premium obligations.

        

Taxes, Privacy & Compliance

  

    
• Taxes: Life settlement proceeds can be taxable depending on basis, cash value, and gain. Consult a tax professional.
    
• Privacy: Buyers typically require HIPAA-compliant access to medical records; we protect your information through secure processes.
    
• Licensing: Settlements are regulated at the state level; we use licensed providers and follow state-specific rules.
  

  

Why Work With Diversified Insurance Brokers

  

We’re an independent, family-owned agency representing 100+ carriers and a broad network of licensed settlement providers. Our role is to advocate for you—explaining trade-offs, shopping multiple buyers, and ensuring transparent, competitive offers. If selling isn’t your best move, we’ll show you alternatives that preserve coverage or reduce costs.

     

    

FAQs: Sell My Life Insurance Policy

    

      

How much money can I get if I sell my policy?

      

        

Offers vary based on age, health, policy type, premiums, and death benefit. Many sellers receive more than surrender value but less than the death benefit. We’ll shop multiple buyers to seek your best price.

      

    

    

      

Can I sell a term life policy?

      

        

Often, yes—if the term policy is convertible to a permanent policy. Convertibility and remaining term period matter to buyers.

      

    

    

      

Will my family still get a death benefit?

      

        

No. After a life settlement, the buyer owns the policy and receives the death benefit. If leaving a legacy is a priority, we can review alternatives.

      

    

    

      

Do I have to keep paying premiums?

      

        

No. After the sale, the buyer is responsible for premiums. Until the sale closes, continue paying premiums to keep coverage in force.

      

    

    

      

Are life settlements safe and regulated?

      

        

Yes. Most states regulate life settlements and require licensing, disclosures, and escrow. We work only with licensed providers and follow state rules.

      

    

    

      

Will I owe taxes on the proceeds?

      

        

Possibly. Depending on your basis and gain, a portion may be taxable. We’ll coordinate with your tax advisor to avoid surprises.

      

    

    

      

How long does the process take?

      

        

Typical timelines range from a few weeks to a couple of months, depending on medical records, carrier turnaround, and state requirements.

      

    

    

Disclosures: For educational purposes only; not legal or tax advice. Offers are subject to buyer underwriting, state rules, and policy carrier approval.