Is it wise to sell your life insurance policy?

Selling a life insurance policy, known as a life settlement, can make sense in specific situations but isn’t automatically wise. It may suit you if you no longer need the coverage, can’t afford premiums, or have a shorter life expectancy that boosts the payout.

However, you’ll typically get less than the death benefit, though more than the cash surrender value. Downsides include losing coverage for beneficiaries, potential tax consequences, and fees that eat into proceeds. Before selling, consider alternatives like reduced paid-up insurance or a partial surrender.

Get multiple offers, understand your policy’s terms, and consult a licensed financial advisor or insurance professional to weigh whether the immediate cash outweighs the long-term protection you’d give up.