Selling a life insurance policy might sound like an unusual financial move, but for many people, it can be a smart one. If you’ve been paying premiums for years and your needs or circumstances have changed, you might be wondering: Can I sell my life insurance policy? And more importantly, am I even eligible to do so?
This article will walk you through everything you need to know about eligibility, what factors determine whether you can sell your policy, and how the entire process works. We’ll break it down in simple terms, touch on real-life considerations, and tackle the most common questions people ask when they’re exploring this option.
Whether you’re dealing with unexpected expenses, planning for retirement, or just want to make the most of an asset you no longer need, this guide will help you figure out if selling your life insurance policy is right for you—and whether you’re eligible to take that step.
Key Eligibility Factors for Selling a Life Insurance Policy
While each case is unique, the following table outlines the core eligibility criteria that most life settlement providers look for:
| Eligibility Factor | Typical Requirement | Why It Matters |
| Age | 65 or older | Older policyholders are closer to the policy’s maturity, which is more attractive to buyers. |
| Health Status | Chronic illness or decreased life expectancy preferred | Buyers often prefer policies where they won’t have to wait decades for a return. |
| Type of Policy | Convertible term policies | Not all policy types qualify; permanent policies hold the most value. |
| Face Value of Policy | $100,000 or more | Smaller policies are often not cost-effective to purchase. |
| Policy In Force Duration | Active for at least 2-5 years | Providers need to assess stability and potential payout timelines. |
| Premium Payments | Reasonable or manageable premiums | High premiums reduce the return on investment for buyers. |
| State Laws | Varies by state | Some states have more restrictive rules or waiting periods. |
Let’s dive into each of these factors in more detail so you understand how they impact your eligibility.
What Determines Eligibility to Sell a Life Insurance Policy?
You might think that just owning a policy is enough to sell it—but unfortunately, it’s not that simple. Here’s a list of what really influences your eligibility:
Your Age
Most people who qualify to sell their life insurance policies are at least 65 years old. That’s because life expectancy plays a huge role in how attractive your policy is to investors. The closer you are to the average life expectancy, the more likely your policy will be purchased.
But age alone isn’t the only factor—your health status plays a big part, too.
Your Health Condition
Buyers are usually third-party investors looking for a return, and that means the sooner they receive the policy’s death benefit, the better. If you have a chronic illness or a shortened life expectancy (due to health conditions), you may be a better candidate for a life settlement.
In fact, some companies specialize in what’s called “viatical settlements,” which are for individuals who are terminally ill and expected to live two years or less. These settlements often have slightly different requirements and processes.
The Type of Life Insurance Policy You Have
Not all policies are created equal. Permanent policies like whole life or universal life are the easiest to sell. These have a cash value component and stay in effect as long as premiums are paid.
Term life policies are more difficult to sell—unless they’re convertible to a permanent policy. If you have a term policy that can’t be converted, there’s a good chance you won’t qualify.
The Face Value of the Policy
A general rule of thumb is that the face value (or death benefit) of the policy should be at least $100,000. That’s because the transaction costs of a life settlement are high enough that it usually isn’t worth it for investors to buy smaller policies.
That said, there are some providers who work with policies that are worth less, but it’s less common and often comes with more hurdles.
How Long Has the Policy Been Active
Most settlement companies want to see that your policy has been active for at least two to five years. This waiting period helps weed out policies that might have been taken out for the sole purpose of selling them—a practice that’s frowned upon and can even be illegal in some states.
If your policy is still new, you may have to wait a bit longer before you’re eligible to sell it.
Premium Affordability
Policies with lower premiums are more attractive to buyers. If your premiums are very high, the buyer will have to continue making those payments after purchasing the policy, which eats into their potential return.
If your premiums are becoming unaffordable, that might actually be a reason to consider selling—just be aware that high premiums can reduce your policy’s appeal on the secondary market.
Your State’s Laws
Life settlements are regulated at the state level, and each state has its own laws and rules. Some require licensing for providers, some require waiting periods, and others have special consumer protections in place.
A few states still have more limited access to life settlements, so it’s important to check your local laws before proceeding.
FAQs
Can anyone sell their life insurance policy?
No, not everyone qualifies. Generally, you must meet age, health, and policy value requirements. Each provider has different criteria, so it’s worth shopping around.
What is a life settlement?
A life settlement is the sale of a life insurance policy to a third party for a lump sum that’s greater than the surrender value but less than the death benefit.
How long does the process take?
The life settlement process typically takes 4 to 12 weeks from start to finish. This includes application, underwriting, and final transfer of ownership.
Can I back out of the sale?
In many states, you have a “rescission period,” which is usually 15 days. During this time, you can cancel the deal and retain your policy.
Conclusion
Selling your life insurance policy can be a strategic way to unlock cash from an asset that no longer serves your needs, but it’s not for everyone. Eligibility depends on several key factors, including your age, health, policy type, face value, and even where you live.
If you think you might qualify, the next step is to speak with a licensed life settlement broker or provider. They’ll review your situation and help determine whether selling your policy makes financial sense.
Ultimately, if you meet the eligibility requirements and the timing is right, selling your life insurance policy could give you financial flexibility, peace of mind, or even the opportunity to enjoy your golden years a little more comfortably.