It is not uncommon for a senior citizen to consider trading his/her equity in a life insurance policy, or term life policies for a lump sum payment.

Even though the reasons why life insurance policies are being "sold" or being "discounted" so frequently are many, some of the most common reasons include: need to have access to money due to unexpected or unforeseen life changes, health issues, need to support a loved one through a personal financial crisis, or simply a desire to be able to put one's own money to good use.

Some of the other reasons why people sell off their life insurance policies include a need for additional funds after retirement, prohibitively high cost of premiums, significant changes occurring in one's financial estate, death of the beneficiary, to accomodate higher cost of living over time, or simply due to a desire to bring about a life style change.

Any equity that may have been accrued in your life insurance policy is no different from all other forms of your personal property assets. Considering that your life insurance equity is just like your equity in a real estate property, stocks and bonds, and automobiles, etc., there is no reason why you cannot trade it or sell it for a lump sum cash amount.

When you "sell" your life insurance policy, you would be actually transferring all your rights and obligations of your life insurance policy in question to a third party (usually a discount broker or a factoring company) for a percentage of the face value of your life insurance policy. The broker who "buys" your life insurance policy will eventually get paid when you pass away -unless of course the broker has borrowed against it and used it as a collateral.

Even though not all types of life insurance policies can be easily sold or transferred to third party brokers, you should not have much of a hurdle if you are holding a Whole Life, Universal Life, Term Life, Variable Life,
Survivorship Life, Adjustable Life, or a Group Life Policy.

It is important (and usually a very good idea) to consult with a professional financial consultant and your attorney before you decide to trade your life insurance policy equity for a bundle of cash.