Can You Sell a Term Life Insurance Policy?

Written By: Brendan Flatow

Retired couple at their dining table reviewing a printed term life insurance policy together

Yes, you can sell a term life insurance policy through a life settlement, and convertible term policies with a death benefit of $100,000 or more draw the most interest from buyers. Whether a specific policy sells depends on the insured’s age and health, how much time is left on the term and on the conversion privilege, and the death benefit.

Most people assume a term policy is only worth something if the insured passes away during the term. It has no cash surrender value, so the insurance company won’t pay anything to take it back. The secondary market sees it differently. As the Texas Department of Insurance puts it, “A life insurance policy, whether it’s a term life or whole life policy, is your personal property.” Like other property, it can be sold, and the right buyer may pay meaningful cash for it.

Why Would a Buyer Want a Term Policy?

A buyer pays for a term policy because it expects to collect the death benefit. Most buyers convert the term coverage into a permanent policy so the coverage can’t expire before the insured passes. That’s why a conversion privilege is usually the most important feature a term policy can have when it comes to a sale.

Once a policy is sold, the buyer becomes the owner and beneficiary, pays every future premium, and receives the death benefit later. The seller receives a lump sum now and stops paying premiums. The NAIC’s consumer guide describes a life settlement as the sale of a policy “for a cash payment that is less than the full amount of the death benefit.” From the buyer’s side, the math comes down to three numbers: what it pays the seller, what it will pay in premiums, and how long it expects to wait.

Which Term Life Policies Can Be Sold?

Convertible term policies are the most marketable, including some group policies that can be converted or carried away from an employer. A non-convertible term policy is harder to sell, because its premiums often rise every year once the level premium period ends. It can still draw interest when the insured’s health has changed enough to offset those rising costs for a buyer.

Convertible individual term. The strongest candidates, especially while the conversion window is still open.
Term with a closing conversion window. Still sellable, but the timeline matters (more on that below).
Non-convertible term. May qualify when the insured’s health has changed enough that the policy’s current and future premium costs still leave value for a life settlement buyer. When the insured is terminally or chronically ill, the sale is a viatical settlement, which some states regulate separately.
Group term through an employer. Depends on whether the coverage can be converted or ported to an individual policy. The NAIC suggests asking, “Is my policy an employer or other group policy? If so, do I need their permission to sell it?”

Does Age or Health Matter When Selling a Term Policy?

Age and health both matter when selling a term policy: most sellers are 65 or older, and insureds younger than that generally need a serious change in health since the policy was issued (a terminal illness can qualify at any age). A shorter life expectancy generally means a higher offer, because the buyer expects to pay premiums for fewer years before the death benefit is paid.

Age alone doesn’t decide it. One of Evergreen’s case examples involved a 60-year-old business owner with a history of prostate cancer and a $4,000,000 convertible term policy with $0 cash surrender value. The company was prepared to surrender it as corporate dynamics changed. Instead, an auction process drew 25 offers, the final bid increased by $640,000 from the initial offer, and the policy sold in a $710,000 life settlement. Evergreen’s post on life settlements for business-owned policies covers that situation in more depth.

Good health doesn’t automatically rule a policy out either. Certain buyers look specifically for policies on healthy older insureds, a market Evergreen covers in Life Settlements for Healthy Clients.

Why Does the Conversion Deadline Matter?

The conversion deadline matters because a term policy loses the feature buyers value most once the right to convert it into permanent coverage expires. Most convertible term policies allow conversion only until a date written into the contract, often a set policy year or a specific age of the insured. Checking the conversion deadline early protects options that disappear afterward.

The conversion provision is usually a page or two in the policy contract, and the carrier can confirm the exact date. Two other dates matter as well: the end of the level premium period, when many term policies see premiums rise sharply, and the next premium due date, since a policy that lapses can no longer be sold. Starting the review early leaves room to compare options without a deadline forcing the decision.

Evergreen’s Expiring Term case example shows how this can play out. The insured was a 74-year-old woman with a $1,000,000 term policy and $0 cash surrender value. The dramatic increase in premiums for the expiring term wasn’t feasible for the family, and a conversion was never in the plan. Rather than surrender what appeared to be a worthless asset, the policyowner completed a $315,000 life settlement to supplement retirement.

How Much Can You Sell a Term Life Insurance Policy For?

A term life insurance policy sells for whatever competing buyers will pay, and there is no standard percentage of the death benefit. Buyers set their offers after reviewing the insured’s life expectancy, the cost of keeping the policy in force, and the conversion options. Outcomes vary widely, and some policies draw no offers at all, so a policy-specific evaluation is more useful than any rule of thumb.

For context across all policy types, LISA’s 2025 market data reports an average life settlement payout of $212,066, compared with an average cash surrender value offered by insurers of $24,360. Those are industry averages across every kind of policy, not a projection for any single term policy.

Evergreen’s companion post, How Much Can I Sell My Life Insurance Policy For?, explains why no online calculator can predict that number and what goes into a Market Value Projection.

How Do You Sell a Term Life Insurance Policy?

To sell a term life insurance policy, gather a recent statement and the premium schedule, then request a Market Value Projection. If the numbers make sense, Evergreen takes the policy to multiple buyers, collects offers, and negotiates on the seller’s behalf. You review the final offer with your own advisors and can stop the process at any time.

Gather the basics. The most recent statement and the premium schedule, plus the policy contract if you have it (that’s where the conversion provision lives).
Request a free Market Value Projection. Evergreen’s life settlement process notes the projection is delivered within 24 hours of receiving the policy basics, at no cost and with no obligation.
Authorize medical records. No new medical exam is needed. Buyers review existing records, and Evergreen coordinates collecting them.
Take the policy to market. The NAIC defines a life settlement broker as “the person or company who represents the seller of the policy and can comparison shop for life settlement offers.” A provider, by contrast, is the buyer. Evergreen’s post on who a life settlement broker represents explains why that difference matters.
Review, decide, and close. The NAIC recommends confirming that proceeds are held in escrow with an independent party during the transfer. Many states also give sellers a period to change their mind after closing. Rules vary, so check Evergreen’s regulation map for your state.

What Are the Alternatives to Selling a Term Policy?

The main alternatives are keeping the policy, converting it to permanent coverage, letting it lapse, or using an accelerated death benefit rider if the policy has one and the insured qualifies. Letting a term policy lapse returns nothing, so it makes sense to compare a sale against the other options before the coverage ends.

The right choice depends on whether anyone still relies on the coverage, what premiums will cost going forward, and the tax picture. Talk it through with your financial advisor, CPA, or attorney before deciding. Policyowners can contact Evergreen directly, and advisors are welcome to reach out on a client’s behalf.

Frequently Asked Questions

Yes, you can sell a term life insurance policy for cash if a buyer is interested. A sale pays a lump sum in cash, and the buyer takes over all future premiums. Convertible policies with a death benefit of $100,000 or more, on an insured who is older or whose health has changed, tend to draw the most interest.

Selling a $50,000 term life insurance policy is difficult. Most life settlement buyers look for policies with a death benefit of at least $100,000, which is also Evergreen’s minimum. For a smaller policy, ask your insurer about conversion, an accelerated death benefit rider, or other options built into the contract.

Selling a term life insurance policy can be a good idea when the coverage is no longer needed or the premiums no longer fit the budget, and the alternative is letting the policy lapse for nothing. It’s a poor fit if your family still depends on the coverage. Review the decision with your own financial, tax, and legal advisors.

You can sell a term policy if the insured is under 65 only in limited cases, usually when the insured has a significant health impairment or a terminal illness. Most sellers are 65 or older, because the buyer’s return depends on life expectancy. A Market Value Projection will show whether there’s a market for the policy.

A $100,000 term life insurance policy has no set sale price. At $100,000, which is Evergreen’s minimum face amount, any offer depends on the insured’s age and health, the premiums needed to keep the policy in force, and how much time and conversion privilege remain on the term. A Market Value Projection shows whether the policy has a market.

Proceeds from selling a term policy can be taxable, at least in part. The NAIC notes that proceeds “are only tax-free under certain circumstances.” Treatment depends on the premiums you’ve paid, the sale price, and your own situation, so speak with a CPA or tax attorney before accepting an offer.

This article is for general educational purposes only and is not legal, tax, or financial advice. Please consult your own attorney, tax advisor, and financial advisor before making decisions about a life insurance policy. Life settlement laws vary by state, eligibility and value are not guaranteed, and outcomes depend on individual circumstances. See Evergreen’s disclosures for details.

If you own a term policy you no longer need, Evergreen works directly with policyowners and their advisors to evaluate secondary market options. See how other policyowners have approached the decision in Evergreen’s case examples.