But some policyholders do sell their own policies, usually because of a personal cash flow crisis or an inability to continue paying premiums. Since life insurance can be considered an “investment,” so to speak, selling could make sense. It likely isn’t an easy decision to make, but selling a life insurance policy can be a relatively quick and simple way to ease financial pressure in a time of need.
Compare personalized quotes from some of Canada’s top life insurance providers*
Can you sell a life insurance policy in Canada?
The short answer is: “Yes!” But in the majority of Canadian provinces, there are laws in place that limit how and to whom you can sell your policy…
What is whole life insurance?
Whole life insurance provides coverage for life at a fixed premium, meaning the cost of your individual payments never changes. This is a big advantage over term insurance, for which the cost of your premiums is likely to change when you renew for another term. Another plus with whole life insurance is that you never have to re-qualify for coverage, so even if you develop a condition, the cost of your premiums won’t increase.
And here’s another good thing about a whole life policy: It can generate a cash value over time…
A viatical settlement allows a policyholder to sell their life insurance for a percentage of the net benefit. It is not legal in most Canadian provinces (but in Ontario, for example, the rules may soon change, specifically around prohibiting the sale of a policy for charitable donations.)
“Viatical settlement” isn’t a term you commonly hear in discussions about life insurance. It’s usually defined as the sale of a life insurance policy by the owner to a third party because the owner is in financial distress. The third party buys the policy at a discounted price, but at a rate higher than the premiums paid or the current cash surrender value.
The idea behind a viatical settlement is that the policyholder gets an immediate cash settlement that can be used however it’s needed…
What life insurance brokers do
Insurance brokers sell and package life insurance, living benefits and wealth-related products. These can include life insurance policies (like term and whole life insurance) and living benefit riders (like disability, critical illness, long-term care, individual, health and dental insurance). Life insurance brokers can also sell wealth products, like segregated funds and annuities.
In addition to selling these products, brokers are required to follow industry guidelines set by provincial insurance counsels and expected to follow guidelines set by industry organizations like the Canadian Life and Health Insurance Association (CLHIA)…