The Settlement Group, Inc.

Policy Owners

Can I Sell My Universal Life Insurance Policy?

In many cases, yes. Universal life insurance is one of the most common types of policies purchased through a life settlement.

Infographic answering can I sell my universal life insurance policy and explaining eligibility, policy types, settlement value, and factors buyers consider.

Can I sell my universal life insurance policy? In many cases, yes. Universal life insurance is one of the most common types of policies purchased through a life settlement. If you no longer need your policy or the premiums have become difficult to afford, selling it may provide a lump sum cash payment that is greater than its cash surrender value.

Universal life policies can be particularly attractive in the life settlement market because of their flexible structure, long-term coverage, and the ability to evaluate future premium requirements in relation to the policy’s death benefit.

Whether your policy qualifies depends on several factors, including:

  • The insured’s age and health
  • The policy’s death benefit
  • Current and future premium requirements
  • The type of universal life insurance
  • Policy guarantees and performance
  • Other underwriting considerations

Not every universal life policy qualifies, but many do.

Why Do Universal Life Policies Qualify More Often Than Term Policies?

Universal life policies often qualify for life settlements more readily than term policies because purchasers can evaluate the policy as long-term coverage without relying on a conversion privilege.

When evaluating a universal life policy, a potential purchaser considers the death benefit, the insured’s life expectancy, the premiums required to keep the policy in force, policy guarantees, and other features that affect the future cost of maintaining the coverage. Certain universal life policies may offer favorable premium structures or guarantees that make them particularly attractive to purchasers.

Term policies present an additional consideration because the coverage is designed to expire. Unless a term policy can be converted to permanent coverage, it generally has limited value in the traditional life settlement market.

What Is a Guaranteed Universal Life (GUL) Settlement?

A guaranteed universal life (GUL) policy is a type of universal life insurance designed to provide a guaranteed death benefit with minimal cash value accumulation.

GUL policies can be particularly attractive in the life settlement market because their guarantees can make future coverage and premium requirements more predictable. As long as the requirements of the policy’s guarantee are met, the coverage can remain in force to the guaranteed age specified by the policy.

Although these policies often build little or no cash value, they may still have significant value in the life settlement market. A potential purchaser evaluates the death benefit, the premiums required to maintain the guarantee, the insured’s age and health, and the specific terms of the policy.

Can a Variable Universal Life Policy Be Sold?

Yes. A variable universal life (VUL) policy may qualify for a life settlement.

Variable universal life policies allow policy owners to allocate cash value among investment options. Investment performance can affect the policy’s cash value, future premium requirements, and how long the policy remains in force.

A potential purchaser will evaluate the policy’s current values, death benefit, premium requirements, investment performance, and other policy features when determining whether they are interested in purchasing it.

What Happens to My Universal Life Policy’s Cash Value If I Sell It?

When you sell your universal life insurance policy through a life settlement, you receive the agreed-upon settlement amount at closing.

The cash value is part of the policy being transferred and is considered when the policy is evaluated. It is not paid to you separately in addition to the life settlement amount, but settlement amounts are typically far greater than the cash surrender value.

Once the transaction is complete, ownership of the policy transfers to the purchaser. The purchaser becomes responsible for future premium payments and receives the death benefit when the insured passes away.

Is a Universal Life Settlement Better Than Surrendering the Policy?

A life settlement may provide substantially more than surrendering a qualifying universal life insurance policy.

When you surrender the policy, the insurance company pays its available cash surrender value, if any, and the coverage ends. With a life settlement, a potential purchaser evaluates the policy based on factors beyond its current cash value, including the death benefit, the insured’s age and health, future premiums, and the policy’s long-term economics.

If an offer is made, you can compare the settlement amount with the amount you would receive by surrendering the policy before deciding whether to sell.

How Do I Know Whether My Universal Life Policy Qualifies?

The easiest way to determine whether your policy may qualify is to have it reviewed by a licensed life settlement company.

A policy review can help determine:

  • Whether your policy may qualify for a life settlement
  • Whether there may be value beyond the cash surrender value
  • What policy features may affect its value
  • Whether a potential purchaser may be interested in the policy

There is no obligation to sell your policy simply because it has been evaluated.

Learn Whether Your Universal Life Policy May Qualify

If you own a universal life insurance policy you no longer need or can no longer afford, it may be worth having the policy evaluated before surrendering it or allowing it to lapse.

Settlement Group can review your universal life policy and determine whether it may qualify for a life settlement. Contact us today for a no-obligation policy review. 912-882-0840