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Can I Sell My UK Life Insurance Policy?

Yes, you can sell your life insurance policy in the UK. Learn more about the details and specifics of the process in this article.

This page is for informational purposes only. Insurance Hero doesn’t offer a facility for buying or selling life insurance policies in the UK and cannot accept enquiries about this subject.

Can I sell my UK life insurance policy?

People sell their life insurance policies for plenty of reasons, including relief from high premiums, urgent need for money, paying off medical bills/taxes, or a person who is terminally ill wants to use the money for a celebration of life.

The last scenario is typical for individuals who never settled down and had a family. In other words, they lack beneficiaries who would be in dire need of their life insurance payout in case of passing away. 

If you want to sell your UK life insurance policy, you should go into the nitty-gritty details and learn as much information as possible. While it’s a billion-dollar market in the US, it is still a niche market in the UK. 

How Does the Process of Selling Insurance Policies in the UK Go?

Traded life policies (TLPs) and traded endowment policies (TEPs) are life insurance policies sold to investors.

The process by which you can sell your life insurance policy is called a life settlement. It involves exchanging your policy to a third-party investor for a one-time cash payment that can be used for any purpose, including covering retirement living expenses, paying off debt, or going for a holiday of a lifetime.

Your life insurance policy must have a “death benefit” to be sold. This is the amount of money the insurer will pay out to your beneficiaries when you die. Death benefits vary immensely depending on age, medical records, lifestyle, and policy type.

Second-hand policies are purchased with the intent to sell them as low-risk investments

You will need a broker when selling your life insurance policy for cash on the secondary market. A life settlement broker acts as a medium: he helps an individual to find a buyer for his policy. 

When you’ve sold your life insurance, the buyer takes over responsibility for paying your insurance premiums for the rest of your life. After you die, they receive the death benefit from your policy.

Who Is Involved in Selling My UK Life Insurance Policy?

As has already been mentioned, it’s still a relatively nascent market in the UK.

There are two options available for selling your life insurance policy there:

  • A life settlement provider
  • A life settlement broker

In the first case, you apply directly to the company purchasing the policy. 

The leading player is a registered charity known as Life Benefit Resources. It directs the funds to organisations supporting and caring for the terminally ill throughout the UK and Europe. 

The charity will purchase from life assurance policyholders diagnosed with three years or less to live. Life Benefit Resources also insists that if you have dependent minors, you must show that measures have been taken for their financial welfare before you sell the policy.

Apart from the primary market, there is also a secondary one. In this case, you can turn to a life settlement broker who, acting on your behalf, will reach several providers to get competing quotes.

The most significant advantage of private investors is that you need to do minimal legwork. Though the buyer purchases the policy at a discount, say 30% of the full benefit, he receives the full life benefit upon the assured’s death.

Mind that with a broker, you’ll need to pay a commission that might be as much as 20% of your settlement. 

death benefit requirement

How Much Do I Get If I Sell My Life Insurance Policy?

You will receive a one-time cash payment when you sell your life insurance policy. You must understand that the sum will vary significantly according to the specifics of your case. 

Unfortunately, there is no reliable way to estimate how much your policy may be worth due to the lack of a standard settlement ratio or payout amount. 

The amount of cash will depend on the following factors:

  • your age
  • your health status
  • your life expectancy
  • policy size and type
  • expected premium payments
  • premium schedule

If you were researching life settlements, you might have encountered life settlement calculators. However, it would be best if you didn’t rely on their estimates. These calculators are usually inaccurate as they are based on very limited information.

Tips for Selling Life Insurance Policy in the UK

Selling your life insurance policy is usually a daunting and painstaking procedure. Let alone find a reputable investor willing to give you a good offer. However, there are several ways to boost your payout.

Check out a few tips:

Familiarise Yourself with the Process

Before you dive headfirst into the process of selling your life insurance policy, it’s a good idea to have a firm grasp of how it works and what to expect. 

Make sure you are aware of the following:

  • your policy type
  • the amount of cash value in your account
  • the amount of coverage you have

Additionally, research the UK’s rules and regulations on selling life insurance policies.

Hire an Independent Expert

To sell your life insurance policy under the most beneficial conditions, you’ll need an expert in questions regarding life insurance settlements to have them assess your policy’s value and help fill in the gaps.

Find a Reputable Broker

When looking for a reputable broker, you may be confused about the number of options available. Don’t be in a hurry and interview several brokers. Yes, it may take some time. However, you will have a chance to find the most suitable conditions.

Watch out for the transaction costs, as brokers tend to eat up profits. According to some experts, brokers may charge as little as 5% to 15% of the gross policy cost and as much as 30% to 50%.

Gather All Your Documents

Besides a copy of your life insurance policy, buyers will also ask for your medical records to assess the value of your policy. Some exceptionally demanding buyers will want to check your five-year medical history. Mind that obtaining these records can save you a few hundred dollars but may be lengthy.

Perks of Selling Life Insurance Policy

End Up With Premium Payments

The biggest perk of selling your life insurance policy is that you no longer have to worry about making high premium payments. 

Get the Value of Your Policy Now 

The primary goal of life insurance is to guarantee that your beneficiaries will be able to support themselves and cover end-of-life expenses on the occasion of your death. 

However, if you don’t have beneficiaries, your family members are well off and don’t need the payout from your policy to make ends meet, you can sell your life insurance and get the value of your policy now.

Get More Cash Than the Surrender Value 

The amount of money you get from a life settlement is typically four times bigger than the accumulated cash surrender value.

Alternatives to Selling Insurance

If you urgently need quick cash and are considering selling your life insurance, check out a few better alternatives first:

Replace Your Policy with a Better Offer

The life insurance policy you own may not be the most beneficial and affordable among all the great available options on the market.

Borrow from Your Policy

Borrowing from the policy is another alternative to selling your life insurance. However, it involves some risks. 

This way, you borrow from the accumulated cash value. In the case of non-payment of the loan, the interest will rise, and the death benefit will be decreased by the amount owed.

Use Accelerated Death Benefits

Depending on your policy contract, the current option may be available if you are terminally ill. In this case, you may access your life insurance policy’s accelerated death benefits. Get in touch with your insurance company and learn more about this option.

Final Thoughts

Now you know the subtleties of life insurance selling in the UK. While it is possible to sell your policy, there are a few factors to consider when searching for a buyer.

The most important thing is to decide whether you want to work with a life settlement provider or approach a life settlement broker. If you’ve decided to stay on the second option, be extremely thorough while choosing the broker to find the most suitable conditions and avoid losing your profits.

FAQs

Can any type of life insurance policy be sold?

Almost all policy types, including term life insurance policies and whole life insurance policies, can be sold. 

Among the exceptions are group life insurance or employer-provided life insurance. You can’t sell those to another investor.

How can I find a reputable broker?

Don’t neglect to do thorough research online before making up a decision on which broker to work with. We’ve already mentioned that consulting an independent expert would be the best idea. 

Before hiring a broker, choose a few with good reviews and arrange short interviews with each. Ask them about how their process goes, what their experience is and the main thing, their fees.

Should I sell my life insurance policy?

It’s up to you to decide whether selling your life insurance policy is a good idea. But before doing it, consider the above-mentioned better alternatives to selling insurance.