Can You Sell a Federal Life Term Life Policy? (2026)

The conversion deadline is earlier than you think, and it is not the end of the level period

People assume a 20-year term policy is convertible for 20 years. It usually is not. Conversion privileges in the U.S. life market are almost always cut off by whichever of several limits arrives first, and the earliest one wins:

• An attained-age cutoff. Commonly 65, sometimes 70. If you bought a 30-year term at 45, the level premium runs to 75 but the conversion window may have closed at 65 — ten years before the policy itself ends.
• A policy-year cutoff. Some forms permit conversion only during the first 10 or 15 policy years regardless of the level period.
• A fixed number of years before expiry. Several carriers cut the privilege off a set number of years before the level period ends.
• The end of the level period itself. The most generous version, and the least common.

Nobody mails you a notice when this window closes. The premium bill looks identical the month before and the month after. That is why the practical instruction is: read the schedule page today, not next year. If you cannot locate the policy, our guide on finding your policy cover page covers what to request and from whom.

One more nuance worth knowing: some term contracts allow conversion only to specific permanent products the carrier designates at the time of conversion, and the carrier may narrow that list. A privilege that exists on paper but points at only one very expensive product is worth less than it looks. Ask what the conversion product menu is currently, not what it was at issue.

What an unconvertible term policy is actually worth: essentially nothing

This deserves to be said plainly because a great deal of marketing on the internet implies otherwise. If the conversion privilege has expired and the insured is not terminally or seriously ill, an in-force term policy has effectively no secondary market value. There is no cash value to surrender. There is no asset to assign. A buyer paying money for it would be paying for the possibility that the insured dies inside the remaining level period — and life settlement pricing is not built on that kind of bet.

There is one narrow exception, and it is a different transaction entirely. Where an insured has a serious or terminal diagnosis with a short life expectancy, a viatical settlement can sometimes be arranged on term coverage even without conversion, because the projected claim falls inside the remaining term. That is a genuinely different market with different licensing, different pricing, and different tax treatment — under Internal Revenue Code section 101(g), proceeds paid to a terminally ill insured meeting the statutory definition can be received income-tax-free, which is not true of an ordinary life settlement.

If neither of those applies, the honest answer is that the conversion privilege itself — not the term policy — is the thing with value, and the value only appears once it is exercised. Our comparison of a life settlement versus term conversion sets the two paths side by side.

What conversion actually produces, and what it costs

Exercising a conversion privilege means the carrier issues a permanent policy — whole life, universal life, or whatever forms it makes available for conversion — at your original underwriting class, with no new medical exam, no new application questions, and no new contestability period on the converted amount. That last point is the whole prize. An insured whose health has deteriorated since the term was issued would be uninsurable or heavily rated on a fresh application. Conversion ignores that entirely.

What it costs: the new permanent premium is calculated at your attained age, not your original issue age. Converting a $500,000 term policy at age 68 will produce a permanent premium many multiples of what the term cost. This is where people balk, and it is where the decision gets interesting rather than obvious.

Three practical points:

1. You do not have to convert the whole face amount. Most provisions allow partial conversion. Converting $250,000 of a $500,000 policy halves the new premium while preserving a permanent, marketable contract.
2. Conversion is generally not underwritten, but the paperwork still has deadlines. The application must be received and the first premium paid before the privilege expires. Starting the process three weeks before the cutoff is not a plan.
3. A converted policy carries no fresh contestability on the converted coverage. Confirm this in writing for your specific form, since a rider added at conversion may have its own new contestable period.

Only after conversion does the ordinary secondary market open up, and even then face amount and health drive whether any provider will bid. Our overview of the term conversion rider covers the mechanics in more detail.

Situation	Secondary market value	Best first move
Convertible term, insured 70+, health has declined	Real, once converted	Get conversion quote at 100% and 50% of face
Convertible term, insured healthy	Usually none	Decide whether the coverage is still needed
Conversion window expired, no serious diagnosis	Effectively none	Compare keeping vs. dropping the coverage
Conversion window expired, terminal diagnosis	Possible viatical market	Ask about IRC 101(g) treatment with your CPA
Policy already lapsed	None while lapsed	Check the reinstatement window immediately
Face amount under $100,000	Rarely bid on	Weigh keeping the coverage instead

Federal Life’s block, its regulator, and who services the policy in 2026

Federal Life Insurance Company is an Illinois-domiciled insurer with its home office at 3750 West Deerfield Road, Riverwoods, Illinois. Its solvency regulator and the agency that handles consumer complaints against it is the Illinois Department of Insurance; the Illinois Insurance Code (215 ILCS 5) supplies the standard policy provisions that Illinois-issued life contracts must contain, including the grace period and reinstatement rights that matter if you have missed a payment.

The corporate structure has moved considerably in the last decade, which affects service more than substance:

• In 2016 the company reorganized from a mutual insurer into a stock insurer held within a newly created mutual holding company.
• In December 2018 Federal Life Mutual Holding Company completed a subscription-rights conversion — a demutualization — and Federal Life Group, Inc. listed on the Nasdaq Capital Market under the ticker FLF.
• In April 2019 Federal Life Group filed a Form 25 to delist voluntarily; the final Nasdaq trading day was on or about April 15, 2019 and the shares moved to the OTC Pink market under FLFG.
• In December 2025 Federal Life Group announced a short-form merger with its parent, which by that point owned more than 90% of the common stock.

None of that alters your contract. A term policy issued in 1998 is governed by its own form and by Illinois law, and reorganizations at the holding company level cannot shorten your conversion window or raise your guaranteed premium. What changes is where mail goes and how long a records request takes. If a written request goes unanswered for more than 30 days, the Illinois Department of Insurance consumer services division will confirm the insurer’s current statutory service address and can log a complaint that tends to produce a faster response than a second letter.

If you are struggling with the premium right now, do this in order

Term policies lapse for a boring reason: the level period ended and the premium jumped to an annually renewable rate that can be five or ten times higher. If that just happened to you, the sequence matters.

1. Do not miss the grace period. Standard Illinois life contracts carry a grace period measured in days after the due date during which the policy stays in force. Inside it, paying the premium fixes everything. Outside it, you are in reinstatement territory, which usually requires evidence of insurability — and if your health has changed, that door may be closed.
2. Ask the carrier for the conversion quote before you decide anything. Even if the number looks impossible, get it in writing with the partial-conversion options priced.
3. Price a reduced conversion. Converting a fraction of the face is the option most people never ask about and it is frequently the one that works.
4. Only then evaluate the secondary market, and only on the converted amount. Face amounts under roughly $100,000 rarely attract a bid, because the fixed costs of underwriting, life expectancy reports, escrow, and legal review are similar whatever the policy size.

If the policy has already lapsed, reinstatement is sometimes still possible — typically within a defined window from the date of lapse, on payment of back premium with interest and satisfactory evidence of insurability. Our page on what to do when a policy is lapsing walks through that clock. Move quickly; the reinstatement window is one of the shortest deadlines in the entire life insurance system.

How buyers evaluate a converted policy, and why healthy insureds get no offer

Once conversion produces a permanent contract, an institutional buyer runs three numbers: the net death benefit, the projected cost of keeping the policy in force until the claim, and a medically underwritten life expectancy. That third number is produced by an independent life expectancy firm reading your medical records, and it drives everything.

The counterintuitive part is that good health reduces the offer. A longer projected life expectancy means the buyer must pay premiums for more years and waits longer for the claim, so the present value of the death benefit falls. An insured in excellent health at 72 will typically draw no bid at all. An insured of the same age with meaningful, documented impairments may draw several competing bids. Our explainer on life expectancy underwriting describes what the reports actually look at.

Two practical consequences. First, do not sanitize your medical history — the whole valuation depends on the records being complete, and the process is built on a HIPAA authorization you sign so the underwriters can obtain them directly. Second, if you are healthy and the honest answer is “no market,” a competent adviser will tell you that in the first conversation rather than after a month of paperwork. Read our broader page on selling a term life policy for the general version of this analysis across carriers.

A short checklist you can finish this week

None of this requires a professional to start. It requires the policy and about an hour.

• Locate the policy schedule page and write down the form number, issue date, level period, and current face amount.
• Find the section headed “Conversion,” “Conversion Privilege,” or “Right to Convert.” Copy the deadline language verbatim.
• Compute the deadline three ways — attained age, policy year, and years before expiry — and take the earliest.
• Call Federal Life policyholder services and ask, in one sentence: what is the last date I may convert this policy, and what permanent products is it convertible to today?
• Ask for the conversion premium at 100%, 50%, and 25% of the current face amount.
• If the deadline has passed, stop and consider whether a terminal or chronic diagnosis changes the analysis. If not, the honest conclusion is that the term policy has no resale value.

If you would like a second set of eyes on the schedule page, send the policy cover page and any conversion quote you have received and we will read it with you. The review is free, we do not purchase policies, and if the answer is that there is nothing here worth selling, that is what you will hear. Call (305) 209-7183 to start.

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Frequently Asked Questions

How do I find out whether my Federal Life term policy is still convertible?

Read the schedule page and the provision headed Conversion or Right to Convert, then confirm it by phone with Federal Life policyholder services. Ask two specific questions: what is the last date I may convert, and which permanent products is this policy convertible to today. Get the answer in writing if you can, because the conversion product menu can change even when the deadline does not.

Can I sell just part of my term policy?

Not directly, but you can achieve something similar by converting only part of the face amount. Most conversion provisions permit partial conversion, which produces a smaller permanent policy at a proportionally smaller premium. That converted portion is the piece that could later be evaluated by the secondary market. The unconverted remainder simply continues as term until its level period ends.

Does Federal Life’s change of corporate control affect my policy?

No. Your contract terms, guaranteed premiums, and conversion rights are fixed by the policy form and Illinois insurance law. The 2016 reorganization, the December 2018 demutualization, the 2019 Nasdaq delisting, and the short-form merger announced in December 2025 all happened above the insurance company. What can change is the service address, the phone number, and how long paperwork takes.

I am healthy and 68 with a convertible $1 million term policy. Should I convert to sell it?

Probably not on those facts alone. Buyers price on life expectancy, and a healthy 68-year-old projects a long one, which suppresses offers to the point where many providers will not bid. Converting first would commit you to a large permanent premium with no assurance of a market. Get the conversion quote, but treat the coverage decision on its own merits first.

What is the difference between a life settlement and a viatical settlement here?

A viatical settlement involves an insured who is terminally or chronically ill under statutory definitions, and proceeds meeting the Internal Revenue Code section 101(g) requirements can be received income-tax-free. A life settlement involves an insured who is not terminally ill, and proceeds are generally taxable in layers. Term coverage is far more likely to find a viatical buyer than a life settlement buyer without conversion.

Will Pine Lake buy my Federal Life term policy?

No. Pine Lake Life Solutions does not purchase policies and is not licensed in every state. We review documents and explain what your options actually are, including the frequent case where the correct answer is that nothing should be sold. Send the policy cover page and any conversion quote to get a free review, or call (305) 209-7183 with the schedule page in front of you.

Related Reading

• Sell Term Life Policy
• What Is A Term Conversion Rider
• Can I Sell A Term Life Insurance Policy
• Life Settlement Vs Term Conversion
• Sell My Federal Life Whole Life Policy
• Sell My Federal Life Universal Life Policy
• Where To Find Your Policy Cover Page
• What Is Life Expectancy Underwriting
• Policy Lapsing What To Do

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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.