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Selling Term Life Insurance Policies
Old 11-16-2019, 12:15 PM   #1
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Selling Term Life Insurance Policies

DW and I have term life insurance policies that are about to reach their term limits next year. I heard that there are companies that buy term polices, continue to pay the premiums (which would be much higher at the end of the fixed rate term period), and reap the benefits of the payout when one passes away.

Does anyone know how this works? Have you done it yourself? If so, please point me in the direction of companies that preform this service.


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Old 11-16-2019, 12:28 PM   #2
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I think they mainly buy whole life policies. The problem with term, which converts to whole life, is the whole life it converts to is sort of the retail or similar to the "rack rate" at a hotel and thus is very expensive. I do not think there would be any value, unless you are very sick, in those policies. I am no expert though. Just guessing.

Hoping to get out around September 1, 2022... I hope, I hope, I hope. Until then off to work I go....
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Old 11-16-2019, 01:12 PM   #3
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Can I Sell My Term Life Insurance Policy for Cash?
Yes, you can sell a term life insurance policy for cash as long as the policy is convertible into permanent life insurance.

To understand why it can be difficult to sell a term life policy, it is vital to understand the difference between a term and permanent policy.

A term life policy lasts for a certain period of time. If you pass away within that time period, your beneficiary receives a death benefit. If you outlive the term, the policy ends at the end of the term.

Permanent life insurance does not have a set term, meaning the policy is in effect for the remainder of the policyholder’s life (as long as the policy is paid up or they continue making payments).

When you purchase a term policy, you often have the option to add a conversion rider. A conversion rider makes a term life policy convertible to a permanent life policy.

A term policy has to be converted to a permanent policy to be sold.

The good news is that, if you have a convertible policy, your health will not have to be re-evaluated when you convert to permanent life insurance.

The bad news is that some conversion riders have age or time limits on when a conversion can happen.

You will need to look at your policy or call your insurance agent to find out if your policy is convertible and what limits it has on conversion.
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Old 11-16-2019, 05:53 PM   #4
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Thank you for the responses! Does anyone else out there have any opinions on this subject matter?
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Old 11-16-2019, 06:08 PM   #5
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You can request a quote on that web page. I quickly threw in some numbers and it wouldn't produce an offer for those parameters, but indicated what they're looking for - they want you to be old and ready to kick the bucket...terminally ill would be great in their eyes.

There are also other firms out there - I'd contact a few to get quotes. Google for Life Settlement

If you're under age 70 they're not going to make an offer for your policy - you still have too long to live, which they'd be paying the premiums in the interim.

I wouldn't convert the term policy unless you had a commitment that it would be purchased from you.

Also keep in mind, whatever you receive will be taxable as income and capital gains.
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