The sale of life insurance policies has emerged as a viable alternative for UK policyholders seeking to release funds tied up in outdated or inadequate cover. According to data from the Association of British Insurers (ABI), approximately 7% of life insurance policies sold on the secondary market are subsequently cancelled by their new owners, rather than continued.
Typically, when personal circumstances change – for example, moving to a larger home with a new, bigger mortgage, or changes in family structure – an existing life insurance policy might no longer meet an individual's needs. Historically, the common assumption has been that the only course of action for such an outdated policy is to cancel it, thereby forfeiting any premiums paid.
However, companies such as We Buy Life Policy are offering a service that allows eligible policyholders to transfer ownership of qualifying life insurance policies in exchange for cash. This can be particularly appealing for those who require immediate access to funds or whose original need for the cover has diminished.
One recent example is Marc Crosby, a personal finance professional who successfully sold an old life insurance policy after purchasing a new home with a larger mortgage. He received a lump sum payment of £12,000 within a week of initiating the process, having realised his previous policy was insufficient for his increased financial commitments.
The sale process generally involves submitting policy documents for valuation, followed by suitability checks and the completion of necessary paperwork to formalise the transfer of ownership. While not every policy will qualify, and the suitability of selling depends entirely on individual circumstances, it presents a potentially valuable option for many UK citizens, with an estimated £1 billion in untapped value held within life insurance policies sold on the secondary market each year (ABI data).