9/11/2026 2:18 AM (PST)

If you want to cash out a life insurance policy, you may have several options depending on the type of policy and your financial situation. One option is surrendering the policy to the insurance company and receiving its cash surrender value. Another possibility, for eligible policies, is selling the policy through a life settlement. With a life settlement, you sell your existing life insurance policy to a third party in exchange for a lump sum of cash. The amount may be greater than the policy's cash surrender value, although it will generally be less than the death benefit. After the sale, the buyer becomes the policy owner, continues paying the premiums, and eventually receives the death benefit. Life settlements are generally considered for permanent policies such as Universal Life, Whole Life, Indexed Universal Life, Variable Universal Life, and survivorship policies. Convertible term policies may also be considered if they can be converted to permanent coverage. Factors such as the policy's face value, premiums, the insured's age, health, and current market conditions can affect whether the policy qualifies and how much it may be worth. For example, Abbistar generally looks for policies with a face value of $250,000 or more, an insured who is 65 or older, and some health impairment or decline since the policy was originally issued. Before deciding to cash out a life insurance policy, compare all available options. Allowing a policy to lapse could result in receiving nothing, while surrendering it provides the insurer's calculated cash surrender value. A life settlement may provide another way to unlock the policy's value. Most importantly, selling a policy is not a loan. You do not repay the settlement, but you give up ownership of the policy and the future death benefit for your beneficiaries. If your policy no longer fits your financial needs, having it evaluated before surrendering or allowing it to lapse can help you understand whether a life settlement is worth considering.