Selling Your Life Insurance Policy

When compared to the alternative of cancelling a life policy, receiving a cash offer is an extremely valuable option. There is no obligation to sell your policy and zero cost to have your policy appraised.

Term Policies - Keeping vs. Converting

Term policy conversion premiums are higher than the original term premiums. However, keeping a policy as an annual renewable term will result in premiums significantly higher over time. When considering higher term premiums it often makes sense to convert only part of the term policy, or none at all. In these cases you can sell the policy amount you are letting go.

Conversion premium examples:

Worth Higher Premium?

The next question becomes, is the higher premium worth it?

If your health is still good, you can often purchase a new policy that locks in a new level premium that costs less than the conversion premium. Typically the need for life insurance changes and we recommend considering lower policy amounts. We can compare new policy quotes vs. converting with you.

In some cases, the insured's health has declined since the term policy was purchased and the increased premium can be worth it. We can help determine if you could qualify for a new policy and compare options.

What is a Term Conversion?

Until the end of the term (10/20/30 years) or a certain age, you have the right to convert a term policy. This allows you to keep the underwring class you were approved for initially and apply that to a new permanent product with no medical underwriting. In short, you keep the rating at your current age.

Conversion premiums will always be higher, often significantly higher. The next decision becomes how much of your existing term policy should you consider selling.

Full Conversion vs. Partial Conversion

You do not need to convert an entire term policy. For example, if you own a $500,000 term policy and now only need $100,000 of protection, you can convert only $100,000. The best way to decide is to run quotes for different amounts and consider the premium options. We can run illustrations and compare your options.

If you decide to convert only part of the term policy, this is known as a partial conversion.

Any of the term policy you decide not to convert is considered the "Remaining Term".

Remaining Term Options

Nearly everyone we work with decides to partially convert or not convert any of their term policy. The question then becomes what happens to the remaining amount of term coverage?

1) The remaining term coverage is cancelled during the partial conversion process.

2) The remaining term remains as a term and premiums begin increasing at the end of the term period.

3) The remaining term is sold and you recieve a cash payment.

Cancel, Keep or Sell?

Option 1, cancelling the remaining term, should never be considered before getting your policy appraised. For example, you could obtain an offer of $50,000 for $400,000 of remaining term coverage!

Option 2, keeping the term, will result in the term becoming an Annual Renewable Term policy once the term period is over. This type of policy has premiums that increase every year, and will often quickly make the remaining term premium extremly high.

Option 3, selling the remaining (or full) term policy, is the option we recommend you consider. You have no obligation to sell your policy at any time, but through the process you will know what you could receive as a cash payment for the sale of the policy. Once you know how much you could recieve, you have complete control over accepting or rejecting offers. This option typically results in the greatest benefit.

Getting your policy appraised:

Life insurance is an important asset, and deciding what to do when a policy is no longer affordable or necessary is best done when you know all the facts. We are experts in this and encourage you to contact us to learn more and explore all your options.