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

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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There are a couple of places that you can get cash for your life insurance policy. These places include the insurance company that you purchased the policy from and private buyers that are interested in continuing on your policy in order to collect on the death benefit.

To get insurance rates on life insurance policies just enter your zip code now!

Before you run out and try to get cash for your life insurance policy, there are a few things that you need to know first.

Who’s Paying and Why

The first place you will probably go in an effort to get cash for your life insurance policy is the company you purchased the policy from in the first place. There are a couple of things that you need to be aware of though.

  • In most cases, your policy won’t have any cash value outside of the premiums you have paid until 10 or more years after you have opened the policy. If you need the cash and the policy is only 5 years old, then you won’t get anymore than what you have paid into the policy.
  • The second thing is that if you cash out on your policy early, then the total benefit will be decreased when you die. If you have family members who will need that benefit if you should die suddenly then consider you reasons for getting cash for the policy. You may want to consider borrowing against the policy rather than taking cash as this provides you with the opportunity to pay back what you have taken. Whatever balance is left over when you die is deducted from the total benefit.

Another option it to sell your policy to a private source, typically companies that purchase life insurance policies, not individuals. You can find these sources online or you can use companies that specialize in helping you find companies that are willing to bid on your policy.

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Why do companies by life insurance policies?

There are many businesses that pay cash for life insurance policies, settlements and lottery winnings. The reason for this is that they are willing to wait until you die to make money off of the deal. (In terms of settlements and lottery winnings, they pay a portion of total payoff to the person in question and then collect the monthly or annual payments over the years).

As you have probably guessed, there is a catch. In most cases, you have to be age 65 or older to sell your life insurance policy to one of these companies. If you are terminally ill, you will have no problem selling your policy to a company like this.

In fact, if you have a term life insurance policy with a number of years left on it and you are over the age of 65 or terminally ill, you can sell that policy as well. Considering that a term life policy has no value, you can’t even cash it in for the premiums, this is an excellent option if you want to use the money for something.

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Why do people sell or cash in life insurance policies?

The truth is, there are a number of reasons why you might want to sell or cash in on your life insurance policy. One common reason is that money is needed for an emergency such as medical bills, job loss, have to replace a vehicle, etc. Some people, however, simply find that they don’t need the policy anymore. Someone with a large policy that no longer has people depending on them financially may find that they can do something else with the money. There are those that receive a policy from another source and they don’t need to carry two policies.

There are those people, such as terminally ill individuals, who feel that they would rather use the money to complete a bucket list or travel with friends or simply give the money away while they are alive to enjoy gifting other people. Perhaps you have other reasons; regardless, you aren’t alone and many people take this route.

What type of life insurance policies offer cash payouts?

In general, only whole life insurance policies with cash value will offer a benefit to you. However, as mentioned before, if you are terminally ill or elderly with a term life insurance company, some private companies will probably be willing to purchase the policy from you and take the chance that you will die before the term policy expires.

You will not be able to cash in a term life policy with your insurance company; it simply has no cash value and is useless in this case.

If you are reading this article because you are in the market for life insurance but weren’t sure if you were going to take a loss if you didn’t need the policy anymore, then it is time for you to take the next step and use a free quote tool. The life insurance quote tool above is easy to use and you will quickly find the best price for your life insurance today!

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