Should you sell your life insurance in retirement?

older workers

Do you feel like you’re not making a wise financial decision every time you pay life insurance premiums?

It’s a scenario all too common for retirees. It may appear that life insurance premiums start becoming a waste of money once you no longer have a young family to look after. This is a valid point and one that retirees should seriously consider ensuring that they live comfortably well after quitting their 9 to 5 jobs. Here are some tips to help you decide whether to hold onto your life insurance or sell it for liquidity.

Life Settlement Option

You may not be aware that life insurance can be sold to another individual or a company. The transaction is usually handled by specialized brokerages. Surrendering your policy to the carrier hardly generates any financial returns on your part, no matter how enticing the cash surrender value appears on the surface. A life settlement transaction proves to be more lucrative, as you can receive 3 to 5 times the amount you’d get from your insurer.

Understand that upon completion of the sale, the new owner pays the premiums and receives the death benefit after you die. While the money you will get exceeds the cash surrender value, it’s less than the face value, with the average seller getting from 20%-35% of the face value of the policy. Make sure to choose a trusted leader in the life settlement industry like ALIR Settlements to get the highest value for your policy.


The original purpose of life insurance is to offer protection for your children and spouse in case you die. There comes a point, however, in which your children are grown and capable of supporting themselves. You may also have accumulated substantial retirement savings over the years, enabling you to sustain the retirement costs for you and your spouse. If you are certain that your children no longer depend on your income, it may make financial sense to liquidate your policy and escape the premium expense.

Income Source

Most retirees will want to avoid working, but the harsh reality is that they may need to take on another job because of insufficient savings. If you belong to this group, then it may be wise to hold onto your life insurance policy. Selling it, however, may be beneficial if you’re not generating sufficient income from your retirement job.

Estate Taxes

It’s interesting to learn that your life insurance can be used as an estate-planning tool. For instance, it can be used to keep your business in the family even if you have insufficient liquid assets to pay estate taxes. Depending on your policy, your heirs might be able to use it in the event of your untimely death. It’s recommended to talk to an estate planning expert to determine whether your policy can help with this matter.

There’s no one-size-fits-all answer to whether you should keep or sell your life insurance in retirement. Be sure to consider your unique financial and life circumstances to formulate an educated decision.