Selling Universal Life Insurance Policy: How It Works & How Much You Could Get

What Is a Universal Life Insurance Policy?

Universal life insurance is a type of permanent life insurance designed to provide lifetime coverage while offering flexibility in how you pay premiums and build policy value. Unlike term life insurance, which covers you for a set number of years, universal life insurance remains in force as long as premiums are paid and the policy stays funded.

Universal life policies combine two key features:

• Death Benefit: A payout provided to your beneficiaries when you pass away.

• Cash Value Component: A portion of your premium payments accumulates as cash value, which can be accessed through loans or withdrawals during your lifetime.

One of the unique features of universal life insurance is that policyowners can adjust premium payments and death benefits over time (within certain limits), making it a flexible option for individuals whose financial needs may change. However, as you get older, rising premiums and policy maintenance costs can sometimes make universal life policies more difficult to afford in retirement, which is why many seniors explore selling their policies for cash.

Why People Sell Universal Life Insurance Policies

Universal life insurance can offer flexibility and long-term protection, but as life changes, the policy may no longer serve its original purpose. Here are some of the most common reasons policyowners choose to sell:

• Rising Premium Costs and Affordability Concerns: Universal life insurance premiums often increase over time. For many retirees living on fixed incomes, rising premium payments can strain finances or force policyowners to consider letting their policy lapse.

• Changing Financial Priorities in Retirement: When you first purchased your policy, protecting dependents or covering debts may have been your priority. In retirement, your focus may shift to maintaining quality of life, preserving savings, or funding unexpected needs.

• Unexpected Medical Bills or Long-Term Care Needs: Healthcare and long-term care costs continue to rise. Selling a universal life policy can create immediate funds to help cover medical expenses, caregiving, or other unplanned costs.

• Beneficiaries No Longer Need the Death Benefit: Your children may now be financially independent, or your estate planning needs may have changed. If your beneficiaries no longer need the death benefit, selling the policy allows you to unlock its value today.

• Desire to Unlock Policy Value for Immediate Use: Life settlements offer policyowners the freedom to use their policy’s value however they wish, whether for travel, home improvements, gifting to loved ones, or simply building a financial cushion for peace of mind.

Can I Sell a Universal Life Insurance Policy for Cash?

Yes. Many universal life insurance policies can often be sold through a life settlement transaction.

How Life Settlements Work

You sell your policy to a licensed buyer or provider in a life settlement. In exchange for a lump sum cash payment, the buyer becomes the new policyowner, takes over premium payments, and receives the death benefit when the insured passes away. You no longer owe premiums and receive cash you can use immediately.

Who Qualifies to Sell

While every case is unique, policyowners often qualify if they meet the following general criteria: 

• Age 65 or older (or younger with certain health conditions).
• Policy face value of $100,000 or more.
• Decline in health since the policy was issued can increase the offer, but it is not required and in many instances, healthy insureds can qualify too.
• Universal life, whole life, or convertible term policies may qualify.

You can read more about common reasons Why Seniors Consider Cashing in Their Life Insurance Policy here.

Viatical Settlements for Chronic or Terminal Illness

For policyowners facing serious or terminal illnesses, a viatical settlement may be an option. Viatical settlements often provide even higher payouts and may offer tax advantages depending on your situation. 

Selling a Universal Life Insurance Policy for Cash

If you’re wondering how selling your universal life insurance policy works, this short video explains the process step-by-step. Learn how life settlements can turn your policy into immediate cash and help you take control of your retirement finances.

While borrowing or withdrawing funds may provide temporary financial relief, many policyowners find that selling their universal life insurance policy through a life settlement can generate a significantly larger cash payout, without the repayment obligations or ongoing premium costs.

How Much Can You Get for Selling Your Universal Life Policy?

Typical Payout Compared to Cash Surrender Value

Many policyowners are surprised to learn that life settlements can provide significantly more than surrendering their policy back to the insurance company. In some cases, life settlement offers may be higher than a policy’s surrender value.

Disclaimer: According to industry research, policyowners who qualify for a life settlement often receive offers that are several times higher than their policy’s surrender value, sometimes up to 6.5x more (based on the 2024 market survey results, released in 2025 from Life Settlement Trade Group). Your actual offer will depend on factors like age, health, policy size, and premium schedule.

Key Factors That Influence Your Offer

Several elements determine the value of your universal life insurance policy:

• Life expectancy: Shorter life expectancy typically results in higher offers.
• Age of the insured: Older insureds often qualify for higher payouts.
• Health condition: Medical history and current health status usually impact valuation.
• Premium schedule: Lower ongoing premium costs may increase policy value.

Policy size: Larger face value policies generally result in larger settlement offers.

Pros and Cons of Selling Your Universal Life Insurance Policy

Benefits of a Life Settlement

• Immediate lump sum cash payment
• End future premium payments
• Flexibility to use proceeds however you choose
• Often receive significantly more than the surrender value
• Turn years of premium payments into accessible value

Considerations and Drawbacks

• Beneficiaries will no longer receive the death benefit
• May create taxable income depending on the settlement amount
• Could impact eligibility for certain public assistance programs (e.g., Medicaid)

Before making a decision, you should consider the factors that determine your life settlement payout. Also, it’s always recommended to speak with a qualified financial advisor or tax professional to fully understand how a life settlement may affect your unique financial situation.

Step 2: Check Eligibility & Get a Free Estimate

Use Lighthouse Life’s free estimate tool to see if your policy qualifies. The initial review takes just minutes, with no obligation and no impact on your policy.

Step 3: Accept Offer & Complete Sale with Trusted Guidance

If you qualify, you’ll receive a fair market offer based on your policy’s value. Once you accept, Lighthouse Life handles the paperwork, transfer process, and payment, making the transaction simple, transparent, and secure.

Get a Free, No-Obligation Estimate Today

If you’re considering selling your universal life insurance policy, take the first step now. You may be able to turn your policy into a valuable financial resource while eliminating premium payments and unlocking cash you can use today.

Use our free estimate tool to find out how much your policy could be worth with no obligation and no cost to get started.