Can you sell your life insurance policy for cash?

Clock April 01, 2022


Many policy owners are unaware, but a life insurance policy is a major asset that can be sold for cash. If a policy no longer suits your needs or has become unaffordable, you have more options than just stopping premium payments or surrendering it to the insurance company. Instead, you can sell your life insurance policy to a third party for a generous cash payout. Selling your policy could better suit your current and future financial needs, and help you benefit from your policy while you’re living.

This transaction is known as a life settlement, or in some cases a viatical settlement, and it often results in a higher value payout than your policy’s cash surrender value.

A man reading about selling his life insurance policy with Lighthouse Life

How does a life settlement work?

A life settlement is the sale of a life insurance policy for its market value. In a life settlement transaction, the policyholder sells the insurance to a third party and, in turn, receives a lump sum cash payment that is on average 4 or more times the cash surrender value of a policy, according to the National Association of Insurance Commissioners. The third-party buyer will take on responsibility for future payments as well as ownership of any death benefits. In certain cases, you may be able to retain a portion of the death benefits.

Once the sale is complete, the money is yours to spend as you wish. There are no restrictions on how you use it, as life insurance is considered your personal property. Many people decide to use this money toward healthcare costs or retirement expenses, but you can decide to put it toward your savings or even future travels. You get to decide how this money will best serve you and your loved ones.

Most people who qualify for life settlements are over the age of 65 and have a policy with a face value of at least $100,000. You can find more specifics on the eligibility requirements on our life settlements page. Most policies that qualify are whole or universal life policies, but there are instances in which term life insurance policies may qualify as well.

If you have been diagnosed with a chronic or terminal illness, you may also be eligible for a viatical settlement. Viatical settlements have stricter eligibility requirements but can quickly generate financial resources for medical and other expenses during challenging times.

What are the pros and cons of selling a life insurance policy?

Selling your life insurance is a significant decision, and you should weigh your options to come to a well-informed conclusion. Don’t forget that there are many trustworthy professionals available to answer your questions and help you arrive at the best outcome.

There are many advantages to life settlements, especially if you’re one of nearly half of all Americans concerned about running out of money in retirement. Find a list of pros and cons below.


  • Large, cash payout
  • Stop paying premiums
  • More valuable than lapsing or surrendering your policy
  • Flexibility to spend payout as you wish


  • Your beneficiaries will not receive the policy’s death benefit
  • Potential for tax liability
  • A life settlement payout could make you ineligible for Medicaid or other financial assistance

How do you get started with a life settlement?

The first step in selling your life insurance policy is finding the right people to work with. You need professionals you can trust will keep your best interest at the forefront. Life settlement providers must be properly licensed and knowledgeable about the necessary regulations and requirements.

Some questions to get you started in vetting the right partners might include:

  • Are you licensed by state insurance departments?
  • What steps do you take to protect my personal information?
  • How long does your average sale take?

At Lighthouse Life, we strive to exceed all standards by being completely transparent of all fees and transactional requirements. We’re here to advocate for you and help you arrive at the best decision, even if that means a life settlement isn’t the right move. We help our clients through the entire process, including assistance with forms and approvals. Most policy owners working with Lighthouse Life receive funds from life settlements in about 45 days.

If a life settlement seems like it might suit your family, take the first step and generate a free estimate or give Lighthouse Life a call at 1-866-676-5115.


Average rating 5 / 5. Vote count: 6

No votes so far! Be the first to rate this post.