Here are all the things you can do and should consider BEFORE you sell your Term or Whole Life insurance policy

Your Life Insurance policy was purchased as a vehicle to protect your family. If you have Term, you’re probably aware that the cost was a lot less than Whole or other permanent life plans. The issue with Term plans is that they eventually come to an end, and usually have no cash-value. So at the end, you’ve paid a lot into it and, if you haven’t died, get nothing back. With Whole Life, premiums are much higher and can be difficult to keep up later on. Not surprisingly, over 250,000 policies are surrendered yearly, either because policyholders no longer need them, they can’t afford to keep them or because no one ever told them of all their options. See below.

Get Rid of It

Ok, I’ve sold life insurance policies for over a decade and this is the last thing I would recommend! If the purpose of having life insurance is family protection, and you’re still the principal bread-winner, what would your family do if you died? However, life happens. If you really need to sell your life insurance policy, let’s look at smarter options.

Convert Your Term to Permanent Insurance

If you have a Term policy, your carrier may allow you to “convert” your Term policy into a permanent one without medical underwriting. The converted policy now becomes a permanent Universal or Whole Life policy which can build cash-value over time. Premiums are much higher, but fixed. Be diligent with these, since most policies are available to convert only until age 70.

Cash-Advance Your ADB Riders

Most life insurance policies have at least one ADB rider. ADB means Accelerated Death Benefit. The rider is usually free when you purchase the policy and activates when the policyowner is told that he/she is going to die within 12 or 24 months. If done successfully, the carrier will advance 50-100% of the death benefit and the policy will end. This rider is also called a ‘Terminal Illness’ benefit rider.

Extend it as an

‘Annual-Renewable’ Term policy

At your Term policy’s end date, this option allows you to keep it year-to-year, without an exam or medical underwriting. However, you’ll notice the premium jumps astronomically high and continues to increase every year you keep it. This is more for those who are terminally ill and can’t get coverage elsewhere. If you can afford it, think of this as a last-chance option since it will be an extremely short-term extension.

Transact a Life Settlement

Certain Term and Whole Life policies will be desirable to investors. They will pay significant sums for those that qualify. Criteria usually involves an older policyowner with significant health issues. The worse the issues, the more the sum paid. The policy must also be convertible, as described earlier. Since these can be one of the most complicated of your options, I’ve included some details below.

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Pros and Cons of Life Settlements

These options have ramifications. Please weigh them carefully and discuss with your family and trusted advisor. *Some plans will allow you to maintain some or all of your beneficiaries. Contact us for more information.


No more premiums to pay, and you get a lump-sum payment which can be up to six figures. All this from a potentially worthless policy you were going to surrender. Cash paid directly  to you for any use.


When you do a life settlement, you give up ownership of the policy. You also give up control of your beneficiaries, since the buyer becomes the new beneficiary, and not your family, when you die.

Get in Touch

If you’ve read this far, I hope you’ve learned more about your options for surrendering your life insurance policy. We would encourage you to contact us or simply click the ‘Get Quote’ tab