How to Sell a Universal Life Insurance Policy for Cash

Clock February 24, 2021


This post has been updated to reflect the most up-to-date information

30-Second Summary of How to Sell a Universal Life Insurance Policy for Cash

Universal life insurance policies are a popular form of permanent life insurance policy. They can accrue value over time and can provide a death benefit to your beneficiaries. However, if your universal life insurance policy no longer serves its intended purpose, you may be able to sell it for cash in a life settlement. 

Selling your policy generally consists of these three steps:

  1. Decide if you still want your policy
  2. See if you qualify for a life settlement
  3. Accept the offer that serves you best

It takes less than 5 minutes to see if you may qualify to sell your universal life insurance policy.

See if you qualify now



Universal life Insurance, a type of “permanent” life insurance, can remain in force for your entire life. As with other types of life insurance, so long as the premiums on the policy are paid to cover the ongoing cost of insurance for the policy, the death benefit will be available to your beneficiaries when you die.

Many people choose universal life policies because of their low premiums (relative to whole life insurance), as well as their ability to accrue cash value over time, similar to a savings account. The policyowner can use the cash value to help pay premiums, withdraw cash from the policy, take a loan against it, or surrender it back to the insurance company.

As with all kinds of life insurance, universal life policies have advantages and disadvantages that you should consider carefully when you decide to buy, keep or terminate a policy. 

For example, if you only pay the minimum premiums for a universal life policy, the policy won’t build enough cash value. If you use the policy’s accumulated cash value to cover those costs, the cash value will decrease. If you do that too often, you run the risk of lapsing the policy.

Additionally, many seniors purchased universal life insurance policies when their financial goals and needs were different than they are today. In many cases, those policies no longer serve their intended purpose, and may be too expensive to maintain to the value they provide.

If this sounds like your situation, you may want to consider selling your universal life insurance policy in a life settlement. Life settlements pay on average four or more times a policy’s cash surrender value and can provide you with a significant cash payment.

Can I Withdraw Money from My Universal Life Insurance Policy?

While many factors determine if you can withdraw money from a universal life policy, the answer is frequently “yes.” But withdraws from a policy’s cash value reduce its death benefit, and have varying tax implications. Policyowners can also take loans against the cash value of a universal life policy, but the loan must be paid back and will reduce the policy’s death benefit by the amount of the outstanding loan. If the policy lapses with a loan outstanding, there could be some possible tax consequences.

If a universal life policyowner wants to access the value of their policy while they are still living, a life settlement may be the best option.

“Most seniors purchased their life insurance policies for good reasons,” says Michael Freedman, CEO of Lighthouse Life. “But when the time comes to enjoy the money they’ve invested along the way, they discover it’s not necessarily easy to do, and may not be in their best long-term interests. This is why many policyowners turn to life settlements as a way to realize the full market value of their policies.”

Why Would I Sell My Life Insurance Policy?

There are many reasons that selling your universal life insurance policy through a life settlement could be beneficial for your future. Some of the most common reasons retirees opt for life settlements include:

The policy is no longer needed or has become unaffordable.

As your lifestyle has changed over the years, you may have outgrown the need you once had for this policy. Similarly, the terms you originally agreed to may no longer be affordable to maintain. Rather than letting the policy lapse or surrendering for its cash surrender value, a life settlement could help you generate a larger cash payment to use as you wish.

You need money for retirement or medical expenses.

In our younger years, it feels as though we have all of the time in the world to prepare for retirement. In reality, many Americans find retirement to be much more expensive than they had planned. Between the rising cost of living and increasing health care costs, life settlements can produce some much-needed extra cash into your savings.

Pad your rainy-day fund.

While the cash from a life settlement could help fund future responsibilities such as health care, there are no limits to what you can put the money toward. Once the sale is final, that money is yours to use on anything you choose from your dream vacation to home renovations. You can even choose to put that money away to prepare for the unexpected.

If you are considering selling your universal life insurance policy and wondering if a life settlement might fit your circumstances, it could be the case. Browse these pros and cons to help guide your process:


  • Quick lump sum payment
  • End to premium payments
  • More cash than the surrender value
  • Flexibility to spend payout as you wish


  • Beneficiaries will not receive death benefits (in most settlements)
  • Potential for tax liability
  • May change eligibility for financial assistance like Medicaid

How to Sell a Universal Life Insurance Policy with a Life Settlement

A life settlement allows you to sell your life insurance policy for its market value, giving you a lump sum of cash you can use for long-term care, medical costs, retirement expenses, or anything you wish. Selling your policy generally consists of these three steps:

  1. Decide if you still want your policy
  2. See if you qualify for a life settlement
  3. Accept the offer that serves you best

A life settlement can help you turn a universal life policy that has outlived its usefulness into a substantial cash windfall that can help you get the most out of your retirement. Understanding the life settlement process can help you choose your best course of action.

Step 1. Decide If You Still Want Your Policy

People purchase life insurance policies for many reasons, from wanting to protect family members from financial hardship, to reducing business risk. However, over time these needs can change. Perhaps the beneficiaries, who were children when the policy began, are now adults without need for the policy’s death benefit. Or maybe the business has been sold, and the life insurance policy is no longer needed.

Consider your life insurance policy – are your financial needs the same now as when you initially purchased it? If not, does it make sense for you to continue paying for the policy, or could you benefit more from selling it for a large cash payout?

Step 2. See If You Qualify for a Life Settlement

If you decide your universal life insurance policy no longer serves its intended purposes, or is too expensive to maintain, you should see if you qualify for a life settlement. People who qualify for a life settlement usually:

  • Have a life insurance policy with a face value of $100,000 or more
  • Are at least 65 years old
  • Have experienced a change in their health since the policy was originally issued

Finding out if you qualify is fast and free, and you can get started in under 5 minutes by using our life settlement estimate calculator.


Step 3. Accept the Offer That Serves You Best

Many companies provide life settlements, so be sure to select the company and offer that work for you and your financial goals. At Lighthouse Life, we advocate for seniors to realize the full market value of their life insurance policies, while providing industry-leading protections and disclosures to policyowners.

Make sure the company whose offer you choose is focused on your best interests, not theirs.

Universal life insurance policies can be a sound financial tool, but make sure you understand your options when it comes to withdrawing cash or taking a loan from your policy. And if your universal life policy no longer serves its intended purpose, or is too expensive to afford any longer, consider if it makes sense to sell it for cash through a life settlement.

To learn more about life settlements for universal life insurance policies, please contact us today.


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