Can You Cash in a Term Life Insurance Policy?

Life insurance is a financial safety net for individuals and their families. Among the diverse types of life insurance policies, term life insurance offers affordable coverage for a specified period. However, many policyholders may wonder if they can cash in their term life insurance policy before its maturity.

Cashing in a Term Life Insurance Policy

Before we discuss cashing in a term life insurance policy, it is essential to understand its basic features. Term life insurance provides coverage for a calculated period, mostly ranging from 10 to 30 years. If the insured individual passes away during the policy term, the death benefit payment goes to the designated beneficiaries. In contrast to permanent life insurance policies such as whole life or universal life, term life insurance policies over time do not accumulate cash value.

Does Term Life Insurance Have a Cash Value?

While term life insurance policies do not have a cash value component in the traditional sense, understanding your options is essential. Consider the duration of your term, whether your policy offers conversion options and your current insurance needs.

If you are looking for a life insurance policy that accumulates cash value over time, consider permanent life insurance options like whole life or universal life insurance. These policies typically have higher premiums but provide lifelong coverage and a cash value component that can be accessed during the insured's lifetime.

Can You Cash Out a Term Life Insurance Policy?

The short answer is no. The primary purpose of term life insurance is to provide a death benefit to the beneficiaries in case of the insured's death. Unlike permanent life insurance policies, term life insurance policies do not accumulate cash value. As a result, policyholders cannot technically cash in a term life insurance policy for a lump sum of money during the policy term.

Options for Policyholders:

1. Allow the Term Policy to Expire: If you have reached the end of your term life insurance policy without making any claims, it will expire. At this point, consider reassessing your insurance needs and exploring other options, such as renewing your policy, converting it into a permanent policy (if your term policy offers conversion options), or obtaining a new term policy.

2. Convertible Term Life Insurance: Some term life insurance policies offer conversion options, allowing policyholders to convert their policy into a permanent life insurance policy without the need for a medical exam. This conversion feature can be valuable if you want to extend your coverage, or if your circumstances have changed and require lifelong protection..

3. Term Policy Lapse: If you cannot continue paying the premiums on your term life insurance policy, it may lapse. Lapsed policies are terminated, and the coverage ceases. It is important to understand the implications of a lapsed policy, as your beneficiaries will no longer be eligible for the death benefit if you pass away after the policy has lapsed..

4. Sell A Term Life Insurance Policy: While you cannot directly cash in a term life insurance policy, an alternative option is to sell it through a life settlement. In a life settlement, you can sell your policy in exchange for a lump sum payment. However, this option is typically more applicable to individuals with a significant life expectancy and policies with high face values..

What is Convertible Term Life Insurance?

Convertible term life insurance is a type of term life insurance policy that includes a conversion option. This feature allows the policyholder to convert their term life insurance policy into a permanent life insurance policy, such as whole life insurance or universal life insurance, without needing a medical examination or proof of insurability.

Convertible term life insurance provides policyholders with the flexibility to adapt their coverage to changing needs and circumstances. It offers the opportunity to secure permanent coverage and potential financial benefits without additional underwriting. If you have a term life insurance policy and anticipate a potential need for lifelong coverage, the conversion option can be a valuable feature to consider.

Are You Considering Selling Your Term Life Insurance?

If you have a term life insurance policy that no longer serves your needs or if you are approaching the conversion deadline, consider selling the policy through a life settlement with Welcome Funds. Considering this financial transaction allows you to sell your policy in exchange for a cash payment or a combination of cash and ongoing coverage without the burden of future premium payments. Selling your life insurance policy through a life settlement can provide immediate financial benefits and alleviate any financial strain associated with maintaining the policy.

If you are considering selling your term life insurance for cash, don't limit yourself to a single offer! At Welcome Funds we streamline the life settlement process. With our single application, we connect you to multiple licensed buyers, simplifying the process. We create competition with our life settlement auction platform, negotiating to secure the highest life settlement offer possible. This saves time and effort, it takes to apply to each buyer individually, potentially dealing with 10-35 different companies.


Janet owned a 20-year term life insurance policy that was expiring within a year. Unfortunately, she could not afford to convert the coverage to a permanent policy. So, just like most term life insurance consumers, she was about to let her term policy lapse and receive $0! Thankfully, Janet learned about the option to sell her policy and contacted Welcome Funds. And she is sure glad she did! Janet received $121,500…instead of $0! Just like a home or car, a life insurance policy may be a valuable asset that can be sold for cash in a regulated secondary market. With a cash settlement from Welcome Funds, Janet now has some relief from the financial stress of mounting medical bills.

Policy's Insured

Female | Age 68

Health Status


Policy Type

Term Life

Face Amount


Annual Premium


Surrender Value


Life Settlement Payout.... $112,500

To see if you qualify to sell your term life insurance policy, please complete our quick Life Settlement Qualifier. Our process is confidential and there is no obligation at any time. For more information about Welcome Funds, please visit or call 877.227.4484.