Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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How Do I Sell Life Insurance

The question of “How do I sell life insurance?” could refer to two scenarios. One is from a sales person’s perspective and the other from a policy holder’s viewpoint.

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First, it can refer to the basic sales question of how an agent sells a life insurance policy to an undecided customer. The second scenario is a situation in which a policyholder sells a life insurance policy back to the company (or to a third party), after a contract has been signed. Let’s first consider the basics of life insurance and how one goes about selling these financial products.

The Secret to Selling Life Insurance

Naturally, people are reluctant to spend any money on financial products. When people invest money, they prefer to see tangibles in return for their expense. The fact that the country is in a recession is only making people more reluctant to invest—even in something practical like a life insurance policy.

The job of the insurance agent is to motivate people to buy a life insurance policy. Insurance agents are told early on to avoid “cold-calling” or any hard sales approach. Instead, they are instructed to identify the people who have a need for life insurance. They target customers more inclined to buy financial protection, such as individuals with families.

The job of the agent is to focus on the emotional and practical aspects of the decision. The agent encourages younger household heads to buy insurance while they are young so that premiums will stay low. They might also try to sell cash value insurance policies.

Another key factor in sales is getting the buyer to talk. In essence, the seller is inducing the prospect to tell himself (or herself) why it works. The more the seller pushes the buyer to talk openly, the more likely the buyer convinces himself that he needs the product. This is why agents will usually ask questions of the buyer, such as “How much life insurance do you want?”

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What if an Insured Wants to Sell His or Her Contract?

Now let’s consider the other side of this issue. What if a policyholder buys a contract but then realizes it is impractical? What if his or her circumstances change? Is there any way that the policyholder can turn around and sell the existing contract back to the company or to another person?

Traditionally, the owner of a contract cannot sell the policy to anyone else. Life insurance policies are not created to be transferable. Usually, cancelling a life insurance policy because you suddenly decide it is impractical is not allowed.

However, there might be a few exceptions to the rule, depending on the insurance company’s rules.

  • Transferring a Policy- For example, some insurance companies may allow you to transfer a life insurance policy to another person for value received. The new buyer of the policy would pay you and then proceed to take over ownership of the contract and all rights. Some in the industry have called this action “investor owned life insurance.”
  • Sell the policy back to the insurance company- If this is allowed in the contract, then you may be able to give the policy back to the issuing company and collect a check for the terminal (not full) value.
  • A viatical contract is also called a life settlement. This option allows for individuals that are terminally ill to sell their policy for a percentage of its face value. This makes sense to both the insurance company and the insured, who no longer needs the traditional policy because of impaired health. If you choose to sell your policy then it is referred to as the act of viatication. Some contracts do allow viatications to take place between the insured and a new investment company or a contract broker.

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Investing in a Canceled Life Insurance Policy

Viatical investment companies buy existing life insurance policies to re-sell them to interested buyers. Some investment companies might choose to receive the life insurance benefits after death and then pay the investors back. A broker typically looks for a high-priced policy.

What types of contracts are traditionally sold to third-party buyers?

These might include life settlement contracts, convertible term insurance and special term contracts.

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Will you qualify for such a contract sale?

Bear in mind that many financial institutions today will bid on an existing policy, but only after taking into account a number of factors like age, health and lifestyle. Interestingly enough, some policy owners eventually sell their contracts for more than the cash value price because of positive factors.

Before proceeding onward in your search for a buyer, make sure that the contract is “convertible” and that there isn’t a time period attached to this convertible condition. If you would like to search for new insurance contracts right now, try using the life insurance rate quote tool for assistance.

Simply enter your zip code and compare the life insurance quotes you will receive now!