Can A Life Insurance Company Sell A Term Insurance Policy?

Can a life insurance company sell a term insurance policy? This question can make you
sleepless. But the good news for you is that, yes, indeed. A life insurance company sells a term insurance
policy. Transforming the term life insurance to a life settlement policy in lieu of cash value is called
selling a term life insurance.

The term life policy is considered as your property in the world of
insurance companies. So, you can sell it at any time. A term life policy comes up with coverage for a
certain time length along with a death benefit.

Again, disease comes with age and is associated with other expenses. Term life insurance has become
indispensable to bear all of these expenses. And you want to sell the policy. Selling a term life policy can
make more money if it is convertible. The policyholder can make it convertible at the time of opening or
any time before the policy meets its expiry date.

Why Term Life Insurance?

As the name implies it is a temporary policy having a short lifespan ranging
from 10 -30 years. If you are a new earner and want to save money with less premium, then a term life
can be the choice.

Basically, it acts as a shield for the future of your family in your absence.
When to sell a term life policy? If the policyholder needs a lump of money to treat the illness for him or
any of his family members, or to invest in a business, or to buy a new property then the policyholder
sells the policy.

Apart from these if the expiration date of the policy is about to come the policyholder
can also sell the policy. Sometimes the policyholder sells the policy because he/she becomes unable to
pay the premiums regularly.

Consideration At The Point Of Selling The Policy

 You have death beneficiaries and the ability to pay the premiums. Then, think once again
before selling your policy.

 Finding a licensed broker to deal with the buying process is a critical parameter. Getting a
trustworthy broker is not easy. A broker with a license will give you solace in somewhat.

 The buyer always asks for less money at the time of buying. So, there is a risk that you may sell
at a low price. Again, you have to pay taxes and sales commission which can be as much as 30%
of a life settlement. Having an appraisal from the life settlement company can abate this
problem. An appraisal will give you an idea about the value of your policy.

 The policyholder has other options to manage the premium if it becomes a burden. The policyholder can
ask for a loan from the policy to pay the emergency bill or can serve the emergency. Or a reduced death
benefit can be considered to lessen the amount of the premium.

The Procedure Of Selling A Term Life Policy Considers

 Check the documents:

Buyers of the policy will ask for the documents regarding the policy. So,
before talking to the buyers all necessary documents along with the medical reports of the

 Find a suitable buyer:

The policyholder can sell the policy either to a broker or to a settlement
company. The policyholder must ensure that the broker has a license from the state. He must be
conscious of the commission of the broker and the working procedure before dealing. When the
policyholder gets all the particulars suitable for him then he /she can proceed.

But if the buyer is a settlement company it also must be a licensed company of the state. Along with this, the
policyholder must gather information about the company regarding how it works.

After that, the policyholder will make a decision to deal with whom.It is wise for a policyholder to consult with multiple brokers and settlement companies to get
more benefits.

 Get your cash:

Once the offer is accepted by the policyholder the buyer and seller see eye to
eye and go on for a deal. Both the buyer and seller must check all the documents signed
properly to change the ownership of the policy. Finally, the buyer will give you a bunch of cash
and you can serve your purpose.

There Are Some Drawbacks Of Selling Term Life Policy

For instance:

 If your family is financially dependent on you then they will be in difficulties as they
won't get death benefit. Furthermore, if you have a loan or mortgage it becomes a burden
for your family after your death to pay the debt.
 Saving money is not a cup of tea. Very often it is seen that the policyholder won't be able
to run out of another insurance after selling the term life policy because of age and health
 When the policyholder has an insurance policy, he/she does need not to pay any taxes.
But, after receiving the cash through life settlements the policyholder has to pay taxes.
 If your policy is not a convertible policy, then the selling of the policy becomes tough.
The buyer's party felt less momentous about the policy. So, the overall selling process
can be slowed down.
 Sometimes the policyholder cannot use their cash in the right way. Perhaps the
policyholder sells the policy for the treatment of illness or to invest in business. But the
money may be spent for other purpose.


Selling a term life insurance is possible and a feasible process. A policyholder must explore
other possible ways provided by the insurance company to get the cash for immediate use.

Ensure the appraisal of your policy from a life settlement company which will increase the value of your policy and
will increase the cash as well. But think once again. Calculate the risk-benefit ratio. And then decide
whether you sell your policy or not.

Does Selling A Term Insurance Policy Require An Extra Charge?

Most of the time the broker or the buyer company charges commissions for running the whole process. It varies and is negotiable.

How Much Will I Get From 40 Lakh Taka Upon Selling?

The cash amount you will get depends on the dealing and negotiation. There is no hard and fast rule about the price of a policy. The age, health status, cash value, and death benefit will determine the amount of money you will get.

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