You (or an elderly parent) may have a life insurance policy that’s no longer needed nor wanted. In many cases, premiums still must be paid. You can surrender the policy but that may trigger a large income tax bill, if investment income has accumulated inside the policy.
Instead of canceling the policy, investigate selling it. Life insurance policies are now being purchased by third parties for cash. In particular, if the insured individual is age 70 with some medical condition, a policy sale may bring more cash, after tax, than a surrender. The buyer will continue to pay the premiums and eventually collect the death benefit.
An experienced life insurance agent can help you locate buyers. Ideally, you’ll sell to an institution such as a bank or a hedge fund that will buy the policy as part of an investment strategy. That may make you feel more comfortable than you would if an individual investor was going to collect on the death of the insured person.
