Should you sell or keep your life insurance policy?

Life insurance is designed to protect your loved ones — but what happens when your needs change?
For many seniors, keeping a life insurance policy no longer makes sense. Premiums increase, beneficiaries’ needs shift, and the original purpose of the coverage fades over time. Yet, most people don’t realize that there’s an alternative to surrendering or letting the policy lapse: selling it through a life settlement.

This article will help you understand how to evaluate whether you should sell or keep your life insurance policy. We’ll break down key factors like costs, eligibility, emotional considerations, and financial trade-offs — and show you how Settle makes it easier than ever to explore your options.

Understanding the Value of Your Life Insurance Policy

Many policyholders see life insurance as a sunk cost — something they’ve paid into for years, but with little flexibility. In reality, your policy is a liquid asset. It has measurable market value that can often be converted into a lump-sum payout through a life settlement.

A life settlement allows you to sell your life insurance policy to an institutional buyer for more than the surrender value, but less than the death benefit. Once sold, you receive a one-time cash payment, and the buyer assumes responsibility for future premiums and becomes the new beneficiary.

Example:
A 72-year-old with a $500,000 universal life policy might surrender it for $10,000… or sell it for $80,000 through the secondary market. That’s real, life-changing money that can be used for retirement, healthcare, debt reduction, or simply peace of mind.

When It Makes Sense to Sell Your Life Insurance Policy

Selling your policy isn’t right for everyone — but it can be a smart move in specific situations.

Here are some of the most common reasons people choose to sell:

You No Longer Need the Coverage

Maybe your children are grown, your spouse is financially secure, or your estate planning goals have changed. If your policy was meant to protect loved ones who are now independent, you might not need the coverage anymore.

Premiums Have Become Too Expensive

As you age, premium costs can rise dramatically, especially for universal or variable life insurance policies. Many seniors struggle to keep up with payments, leading to lapses. Selling before that happens can recapture years of value you’ve already paid in.

You Want to Improve Cash Flow

A lump-sum payout can free up cash for immediate financial needs — paying off debt, covering medical costs, or simply enjoying retirement. For retirees on a fixed income, this can significantly improve quality of life.

Your Health Has Changed

Ironically, declining health can sometimes increase your policy’s market value, as buyers are more willing to pay a premium for certain risk profiles. This can turn a burden into a meaningful financial opportunity.

You Have Better Investment Opportunities

For some, selling a policy is part of a broader wealth strategy — converting an illiquid, non-performing asset into cash that can be reinvested for higher returns.

When It Might Make Sense to Keep Your Policy

While selling can be beneficial, there are cases where keeping your policy provides more long-term security.

Your Beneficiaries Still Rely on the Death Benefit

If your spouse, dependents, or special-needs family members rely on your coverage, maintaining the policy may be critical for their financial well-being.

You Have No Immediate Financial Needs

If you’re financially stable and premiums are manageable, the policy can remain a valuable estate asset. The tax-free death benefit may be worth more to your heirs than a current payout.

You Want to Leave a Legacy

Some policyholders choose to keep life insurance purely for philanthropic reasons — donating the benefit to a charity, religious organization, or cause that matters deeply to them.

You’re Still in Good Health and the Policy Has Time to Grow

Younger seniors (60–65) with policies that still have strong cash value and affordable premiums may benefit from holding on to their policy a few more years before evaluating a sale.

The Hidden Cost of Letting a Policy Lapse

Each year, seniors let billions of dollars in life insurance lapse — often without realizing that their policy could have been sold for a meaningful sum.

According to industry data, over 90% of life insurance policies never pay a death claim. Most either lapse or are surrendered for a fraction of their worth.

By choosing to explore a life settlement before canceling your policy, you may recover years of premiums and turn a dormant asset into something useful for your family today.

How to Decide What’s Right for You

If you’re unsure whether to sell or keep your life insurance policy, consider these five key questions:

Can I comfortably afford the premiums going forward?
Do my beneficiaries still need the financial protection?
What is my policy worth on the secondary market?
Would a lump-sum payout improve my current financial situation?
Am I emotionally ready to part with this policy?

If you answer “yes” to questions 3 or 4, it’s worth exploring a life settlement.
If questions 1 and 2 hold more weight, keeping your policy may still be the right decision.

Emotional and Psychological Considerations

Selling a life insurance policy can feel emotional — after all, it was likely purchased to protect the people you care about most.

It’s important to remember that selling doesn’t erase your care or responsibility — it’s a financial decision, not a moral one. For many, it’s about adapting to life’s changing circumstances. You’re not giving up protection; you’re gaining flexibility, liquidity, and peace of mind.

Many clients who go through Settle’s process say they feel relieved — freed from payments and able to redirect funds to what matters most: enjoying life, giving to family, or living debt-free.

How Settle Makes the Decision Easier

Settle was created to bring transparency and simplicity to the life settlement process.
We combine technology, data, and human expertise to help you understand your options clearly — without pressure.

Here’s how we make it easy:

Instant Appraisal

Our online appraisal tool provides an instant, data-backed estimate of your policy’s market value in minutes — without requiring phone calls or paperwork.

Transparent Process

You’ll see side-by-side comparisons of real offers from institutional buyers, so you can make an informed decision with confidence.

No Hidden Fees

Settle charges a fixed, transparent commission that’s far lower than traditional brokers (8–10% instead of 30–40%).

Confidential & Secure

Your data is HIPAA-protected and handled with complete privacy. We never share your personal information without your permission.

Questions to Ask Before Selling Your Policy

If you’re considering selling, make sure you or your advisor ask:

Who are the buyers making offers on my policy?
What are the total commissions or fees?
How long will it take to receive funds after accepting an offer?
Are there any tax implications I should plan for?
Will I need to provide ongoing medical updates after selling?

Working with a trusted, transparent platform like Settle ensures you get clear answers to each of these questions — before you make a decision.

The Bottom Line: When Selling Makes the Most Sense

You should consider selling your life insurance policy if:

You no longer need or can afford it
You want immediate liquidity or debt relief
You have a large policy with minimal surrender value
You’re 65 or older with a universal or whole life policy
You value flexibility and cash now more than a future benefit

You may want to keep your policy if:

You still need to provide for dependents
Premiums are manageable and tax-free benefits are crucial
The policy is part of a trust or estate plan
You have emotional or legacy-driven reasons to maintain it

How to Get Started

If you’re on the fence, the smartest next step is to see what your policy is actually worth.
There’s no cost, no obligation, and it only takes a few minutes to find out.

Even if you decide not to sell, knowing your policy’s market value gives you clarity and leverage — something every policyholder deserves.

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