Two gates have to open. The conversion privilege has to still be exercisable, and nobody else can already have a claim on the policy. Most guides only cover the first. With Farm Bureau Life the second matters more than usual, because a large share of this block was written around farm and small-business obligations: term coverage assigned to a lender securing an operating loan, coverage funding a buy-sell agreement between siblings on a family operation, or key person coverage on the person who actually runs the place. Any of those creates a party whose consent or release you need before a sale is even possible.
On the first gate, the logic is the same everywhere. A settlement buyer holds a policy until the death benefit is paid, so pure term insurance, which expires by design, is worth almost nothing to it. What it actually purchases is the contractual right to convert the term contract into permanent coverage at attained age with no new medical underwriting. That option is valuable on an impaired insured and nearly worthless on a healthy one. Once it expires, no broker can produce an offer.
In This Article
Check for a collateral assignment before anything else
If the policy was taken out in connection with borrowing, there is a good chance it was assigned to the lender. A collateral assignment pledges the death benefit, up to the outstanding debt, to the lender as security. The owner keeps the policy and keeps whatever exceeds the debt, but the lender’s interest is recorded with the insurer and it does not go away because the loan was paid.
That last point is where people get stuck. Collateral assignments are frequently left on file for years after the underlying loan was satisfied, because nobody filed the release. The insurer will not process a change of ownership while an assignment of record exists, which means a settlement cannot close. Discovering that after an offer is accepted costs weeks and sometimes the offer itself.
Handle it early. Ask the carrier in writing for a list of all assignments of record on the policy, with dates and assignees. If an assignment appears and the debt is paid, request a written release from the lender on its letterhead and file it with the insurer. If the debt is outstanding, the lender has to be part of the conversation from the beginning, because the settlement proceeds or the assignment itself will have to be addressed at closing.
The same check applies to any restriction in a divorce decree requiring the insured to maintain coverage for a former spouse or for child support. Those obligations are enforceable by a court even when the insurance paperwork does not reflect them, and selling a policy subject to one is a serious problem.
Who actually owns it? Farm, family, and business ownership
The owner is the party who can sell, and it is not always the insured. Read the ownership line on the face page or ask the carrier for the owner of record, because memory is unreliable here.
Individually owned. The simplest case. The owner applies, the insured cooperates with underwriting and signs a HIPAA authorization, and beneficiaries are typically notified as part of the process.
Business owned. If a farm entity, LLC, or corporation owns the policy, the entity is the seller. Expect the buyer to want the operating agreement or bylaws, a resolution authorizing the sale, evidence of who has signing authority, and confirmation that the transaction does not violate any agreement among the owners. Our page on selling a business-owned policy covers the documentation sequence.
Funding a buy-sell agreement. Very common on family operations, and the trickiest. A cross-purchase or entity-purchase agreement may require each owner to maintain coverage on the others. Selling a policy that the agreement obligates you to maintain can breach it, and the remaining owners are the ones who will discover that at the worst possible moment. Read the buy-sell agreement, and have your own attorney read it, before doing anything.
Key person coverage. The business owns it and is the beneficiary; the insured has no ownership interest. Whether it can be sold is a question about the entity’s authority, not the insured’s wishes. See selling key person coverage. If you are the insured but not the owner, our page on selling a policy you do not personally hold explains the roles.
Finding the conversion deadline
Conversion privileges normally expire at the earlier of a stated attained age of the insured, commonly between 65 and 70, or a stated policy year, often 10 or 15 even on a 20- or 30-year level product. Whichever comes first ends the right. A 30-year policy bought at 45 can lose conversion at 65 with a decade of level premium left to run, and owners are routinely caught by this.
Look in the policy body for a provision headed Conversion Privilege, Right to Convert, or Exchange Option, then check the schedule page for a separate rider carrying its own expiry. Ask Farm Bureau Life’s policy service center in writing for four things: the last date conversion may be exercised, the full list of permanent plans available for conversion on that specific contract, whether the entire face amount is convertible or only a portion, and the guaranteed renewal premium schedule after the level period ends. A partial conversion right is a materially smaller asset and buyers price it that way.
Before you dial, confirm you are calling the right company. Farm Bureau Life Insurance Company is based in West Des Moines, domiciled in Iowa, and regulated by the Iowa Insurance Division; its holding company FBL Financial Group was taken private in 2021 by Farm Bureau Property and Casualty Insurance Company. Southern Farm Bureau Life Insurance Company in Jackson, Mississippi is a separate insurer, as are several other state Farm Bureau life companies. A request sent to the wrong one comes back weeks later with the deadline still running.
A lapsed Farm Bureau membership does not void an in-force policy, though it can confuse which office claims your file. Go to the home office service line if a county office is unsure. Our explainer on the term conversion rider covers the exchange itself.
| Who or what has a claim | How to confirm it | What has to happen before a sale |
|---|---|---|
| Lender with a collateral assignment | Carrier’s written list of assignments of record | Written release from the lender, or payoff at closing |
| Business entity as owner | Owner of record on the carrier’s file | Authorizing resolution and evidence of signing authority |
| Buy-sell agreement among owners | The agreement itself, reviewed by counsel | Consent of the other parties or an amendment |
| Irrevocable beneficiary | Beneficiary designation on the carrier’s file | Written consent from that beneficiary |
| Divorce decree requiring coverage | The decree, not the insurance paperwork | Court order or agreement releasing the obligation |
| Nobody; individually owned and unencumbered | Carrier confirmation of owner and assignments | Nothing further; proceed to the conversion question |
Sequencing, and which permanent plan to convert into
If the conversion window has at least six months of runway, selling the term policy as it stands is usually cleanest. The buyer takes ownership with the conversion right attached and exercises it after closing, so the seller never funds a permanent premium at an advanced age. A settlement typically runs 60 to 120 days from application to funded escrow, so a shorter window causes buyers to decline on timing rather than on merit. That timeline stretches further when a lender release or a business resolution is needed, which is the other reason to sort out assignments and authority first.
If the deadline forces a conversion, the plan chosen drives the price. A guaranteed universal life design with a long no-lapse guarantee gives a buyer a fixed, predictable carrying cost and prices best; our Farm Bureau Life guaranteed universal page covers how those contracts behave. An indexed or cash-accumulation chassis with a heavy target premium prices worse, because the buyer must underwrite the risk of funding it more heavily than planned.
The costliest ordering mistake is converting into whatever is suggested and asking about market value afterward. Get the conversion options quoted and get a preliminary read on how each would be valued before electing one. And never surrender or lapse anything while a review is pending, because once coverage ends there is nothing to evaluate and reinstatement generally requires evidence of insurability the insured may no longer have. The comparison is set out at life settlement versus term conversion.
If conversion has already expired
With the conversion privilege gone, the term policy has essentially no market value, and the remaining decisions are about coverage rather than cash. Three things are still worth doing.
Read the guaranteed renewal rate table. Most level term contracts continue as annually renewable term rather than terminating, with premiums recalculated at attained age each year at the contract’s guaranteed maximums. Those rates rise steeply, often several times the level premium in the first post-level year. For an insured who is now uninsurable and still carrying farm debt or a buy-sell obligation, a year or two of expensive coverage can be entirely rational.
Ask about reducing rather than dropping. Many contracts allow a face amount reduction, which cuts the premium while keeping coverage in force. If the original death benefit was sized to an operating loan that has since been paid down, the coverage may simply be larger than the obligation it was bought to cover.
Ask about riders. Many term contracts include a terminal illness acceleration provision at no additional premium. If a qualifying diagnosis exists, that claim is faster and simpler than anything the secondary market offers.
Then inventory the permanent coverage. If the insured also owns whole life or universal life above roughly $100,000, that is where value actually sits, and it is a genuine settlement candidate in a way an expired term policy never will be.
Who has a real case, and what to send
The profile that produces offers is narrow and worth stating plainly. The insured is generally 68 or older. The death benefit is comfortably above $100,000, because fixed underwriting and closing costs put the practical floor there. The conversion privilege has at least four to six months of runway. Health has declined enough since the original underwriting that an independent life expectancy underwriter would score the case materially shorter than standard mortality. And the ownership is clean, meaning no unreleased assignment, no unresolved buy-sell obligation, and clear authority to sign.
It is not a case when conversion has expired, when the insured is healthy, when a lender still holds an assignment for an outstanding debt, or when the coverage is still doing necessary work. Selling protection that a farm operating loan or a partnership agreement still depends on, in order to solve a cash problem that has a smaller solution, is a bad trade. We would rather say so than run the file.
To get a preliminary read, send four things: the policy cover page, the carrier’s written statement of the conversion expiry and available conversion plans, the carrier’s written list of assignments of record, and a short summary of the insured’s current diagnoses and treating physicians.
Pine Lake Life Solutions provides education and a free policy review. We do not purchase policies and are not licensed in every state. Whether a settlement is permitted where you live, and who must be licensed to arrange one, is set by your own state’s insurance law rather than Iowa’s, even though Iowa supervises the insurer. Nothing here is legal, tax, or investment advice, and anything involving a business entity, a buy-sell agreement, or a court order belongs with your own attorney first.
Frequently Asked Questions
The loan is paid off. Do I still need a release from the lender?
Yes, if a collateral assignment is still recorded with the insurer. Assignments are routinely left on file after the debt is satisfied because nobody filed the release. The carrier will not process a change of ownership while one exists, so a settlement cannot close. Request the lender’s written release on its letterhead and file it with the insurer early.
Our family farm LLC owns the policy. Can we sell it?
Potentially, but the entity is the seller rather than any individual. Expect a buyer to require the operating agreement, a resolution authorizing the sale, evidence of who has signing authority, and confirmation that the transaction does not breach any agreement among the members. If a buy-sell agreement obligates the entity to maintain the coverage, have your attorney review it first.
How long does a Farm Bureau term conversion privilege last?
It normally ends at the earlier of a stated attained age, commonly between 65 and 70, or a stated policy year, often 10 or 15 even on a longer level term product. That means it frequently expires with years of level premium remaining. Get the exact date in writing from the carrier rather than inferring it from the level term length.
Am I contacting the right Farm Bureau company?
Check the full name on the face page. Farm Bureau Life Insurance Company is based in West Des Moines, Iowa and operates under the Farm Bureau Financial Services brand. Southern Farm Bureau Life Insurance Company in Jackson, Mississippi is a separate insurer, and several state federations have their own life companies. Sending a request to the wrong one wastes weeks.
Does a lapsed Farm Bureau membership affect my policy?
It does not void an in-force life insurance policy. The contract stands on its own terms and the insurer remains obligated. Membership status can affect which office handles servicing, so if a county office is unsure who owns the file, contact the home office policy service line directly with the policy number and the insured’s identifying details.
My coverage was sized to a farm operating loan I have paid down. What now?
Ask whether the contract permits a reduction in face amount, which lowers the premium while keeping coverage in force. That is often more sensible than dropping the policy outright, especially if some obligation remains. Also confirm that any collateral assignment tied to the retired debt has been released, since a stale assignment causes problems later.
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Related Reading
- Can I Sell A Term Life Insurance Policy
- What Is A Term Conversion Rider
- What Is A Collateral Assignment
- Can I Sell A Policy Owned By A Business
- Can I Sell A Key Man Life Insurance Policy
- Can I Sell A Policy If I Am Not The Insured
- Life Settlement Vs Term Conversion
- Sell My Farm Bureau Life Guaranteed Universal Policy
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.