Can You Sell a Life Insurance Policy Before You Die?

Yes — and for many families it's worth far more than surrendering or letting the policy lapse.

Yes. You can sell a life insurance policy you own to a licensed third party for a cash payment while the insured is still living. It's called a life settlement — or, when the insured is terminally or chronically ill, a viatical settlement. The buyer takes over the premiums and receives the death benefit later; you get a lump sum now, typically far more than the policy's cash surrender value.

How it works

You (or a licensed broker acting for you) provide the policy details and medical records to buyers. Buyers estimate the insured's life expectancy and bid. If you accept an offer, ownership transfers to the buyer, who pays future premiums and collects the death benefit when the time comes. You walk away with cash and no more premiums.

Who qualifies

The strongest candidates are policies with a death benefit of $100,000 or more where the insured is 65 or older, or younger but seriously ill. Universal life is the most sought-after; whole life and convertible term can also sell. Small policies (under $100,000) rarely attract buyers.

How much can you get?

A life settlement commonly pays 20–40% of the death benefit; a viatical settlement, for a terminal diagnosis, often pays 50–80% and is usually free of income tax. Either way it typically beats the insurer's surrender offer by a wide margin — and letting a policy lapse pays nothing.

Why the insurer won't mention this

The insurance company only quotes you the surrender value, based on the cash you've accumulated. A buyer pays based on the death benefit they'll eventually collect — a different, usually much larger number. That gap is why the secondary market exists, and why most states license the brokers who work it.

See what a policy could be worth

Free, 5 minutes, an honest read — including "it doesn't qualify."

Get an honest assessment →

Common questions

Is selling a life insurance policy legal?

Yes. The life settlement market is regulated in most states, and brokers generally owe a fiduciary duty to you, the seller.

Do I need to be terminally ill to sell?

No. Terminal or chronic illness (a viatical settlement) brings the highest offers, but healthy seniors 65+ can qualify for a life settlement.

Will I owe taxes?

Viatical proceeds for a terminal diagnosis are generally income-tax-free; life settlements can be partly taxable. Talk to a tax advisor about your situation.