Since term life insurance does not have a cash value that can be surrendered many policy owners simply let their policies lapse when the coverage becomes too expensive, or it is no longer needed. Selling your term policy in a life settlement transaction can unlock value that would otherwise disappear by letting your policy lapse without learning the market value you might be leaving behind.
Most buyers of life insurance in the secondary market only purchase permanent insurance policies such as universal life. However, in many instances owners of term life insurance are still able to sell their policies for a cash settlement or other exchange option. Many term products have a conversion feature where the owner can convert their policy into a permanent product such as universal or whole life.
A significant portion of policies purchased by life settlement investors are term conversions where a newly converted policy becomes the basis for the market value of a transaction. Unfortunately, not all term policies are convertible or have a limited amount of time to exercise a conversion option. In those cases where the term life insurance policy is beyond the level term period and enters an annual renewal mode at increased rates, there still may be value to be had in exploring a sale of the policy. If the renewal rates are low enough and coupled with the health evaluation, a value can still be generated to effect a policy sale.
Since the cash surrender value of term life insurance does not exist, by product design, you can instead sell your term life insurance policy and work with a purchaser to access the hidden value in your life insurance.