How to Cash in Your Life Insurance While Still Alive


Depending on your personal financial situation, cashing in your life insurance policy while you’re still alive could benefit your overall financial standing and open up doors to new opportunities. Many individuals are unaware that they are able to sell their life insurance policy just as their able to sell any other asset. The ability to cash in on your life insurance while still alive is often an overlooked option due to its lack of public awareness. 

Cashing in your life insurance policy while still alive is also known as a “life settlement.” A life settlement is defined as the sale of an existing life insurance policy for more than its cash surrender value, but less than its net death benefit. Consumers are quickly realizing that they have this option when either forced to pay costly premiums or to surrender their policy for little if they no longer need or can afford their coverage. 

How it Works

The first step is determining whether you’re eligible to cash in your life insurance while you’re still alive. While both term and permanent life insurance policies can be sold, there are a few eligibility requirements to be aware of, the most important of which are:

  • Age and health: In general, to qualify for a life settlement, the policy holder should be 65 or older, though younger individuals may still qualify.
  • Type of policy: The majority of policies sold are universal life policies, though others may still qualify.
  • Premiums: The amount of premium payments required to keep the policy in force will play a role as to whether the policy can be sold or not.
  • Death benefit: Also known as the face value, policies with a death benefit of more than $100,000 are usually easier to sell as they are more attractive to a third party

If you’re interested in knowing the potential value of policy should you sell it today, this market value calculator can tell you just that.

What to Do Next

The easiest way to determine if you’re eligible to sell your life insurance while you’re still alive to contact a licensed life settlement specialist. They’ll not only determine if you’re eligible, but they’ll also help walk you through the simple life settlement process. Once the sale is complete, ownership of the policy is transferred to a third-party intermediary (like Abacus) who is responsible for all future premium payments and will collect the death benefit when the policy matures. 

It’s important to remember that a life settlement is not a loan. It is a one-time transfer of money from an institutional investment fund to the insured in exchange for policy ownership. Once the cash is transferred, it belongs entirely to the policyholder. You will never be expected to pay back any portion of your policy.

Whether it’s to pay for mounting medical bills or to start that company you’ve always wanted to lead, selling your life insurance while you’re alive may be the perfect option.  


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