Homesteaders Life Company writes life insurance to fund prearranged funerals, distributed through funeral homes — not retail term insurance. An Iowa mutual company founded in 1906 and based in Des Moines, regulated by the Iowa Insurance Division, its contracts are typically whole life on single-pay, three-pay, five-pay, or ten-pay schedules, frequently with a guaranteed annual increase in the death benefit to keep pace with funeral costs. As of 2026 we cannot confirm a retail term life product from this company, and rather than assert one exists, the useful step is to identify what you actually hold.
That matters because a pre-need contract assigned to a funeral home generally cannot be sold at all. The death benefit has already been committed to a specific list of goods and services, and in most cases irrevocably, because irrevocability is what allows the arrangement to be excluded from countable resources when someone applies for Medicaid.
If, on inspection, you hold genuine level term insurance — from Homesteaders or from another company whose name got blended with the funeral home’s over the years — the rest of this page is the analysis that applies. Term has resale value only while it can still be converted into permanent coverage, and that window usually closes long before the level premium period ends.
In This Article
- Identifying What You Hold
- Build the Timeline: Four Dates Govern Every Term Policy
- Why Only Convertible Term Has Market Value
- Where the Confusion Usually Comes From
- If You Hold Convertible Term: The Request to Send
- Face Amount: The Threshold Nobody Mentions Early Enough
- Iowa Domicile, and Vetting Anyone Who Contacts You
- Frequently Asked Questions
Identifying What You Hold
Four questions settle it, and the documents answer all of them.
Was the arrangement made at a funeral home? If so, it is a pre-need funeral funding policy in almost every case. Pre-need arrangements involve two separate documents: an insurance policy from the insurer, and a funeral goods and services contract from the funeral home listing what will be provided. If a second document exists, this is a pre-need arrangement regardless of what anyone called it.
Does the death benefit increase each year on its own? A guaranteed annual increase is a pre-need funding feature designed to track funeral inflation. Term insurance does not do this; its face amount is level or declining.
Is there a guaranteed cash value table? Level term normally builds none. A table of guaranteed values by policy year means permanent insurance.
Does the contract state a level premium period and an expiry age? Term terminates on a date. Permanent insurance matures, typically at age 100 or 121.
If the answers point to a pre-need whole life contract, the relevant reading is our final expense and burial policy analysis, and the general rules for that size of coverage are on selling a final expense policy. If you do hold term, continue below — and note there is a separate live page covering the Homesteaders term block.
Build the Timeline: Four Dates Govern Every Term Policy
Rather than reading the contract front to back, extract four dates and write them on one page. Everything about a term policy’s options follows from where today sits on that timeline.
Date 1 — the issue date. Everything is measured from here, including the contestability period and most conversion deadlines.
Date 2 — the end of the contestability period. Two years from issue in nearly every state. Within that window the carrier may rescind for material misrepresentation on the application, which is why no legitimate buyer will bid on a policy in its first two years. See how contestability works.
Date 3 — the conversion deadline. Usually the earlier of a stated policy anniversary or a stated attained age. This is the date that determines whether the policy has any secondary market value, and it is almost always earlier than owners assume. A 20-year level term issued at 54 may permit conversion only through policy year 10, or through attained age 70.
Date 4 — the end of the level premium period, and expiry. After the level period, the premium is typically recalculated at attained age each year and climbs steeply, or the policy simply terminates.
Once those four dates are on paper, the analysis takes about five minutes. Today before date 2: nothing to do but wait. Today after date 3: the policy has no market value and the question becomes how to replace or wind down coverage. Between dates 2 and 3: this is the window in which anything is possible.
Why Only Convertible Term Has Market Value
A life settlement buyer purchases a death benefit that will eventually be collected. Term coverage that expires while the insured is still living pays nothing, so an unconvertible term policy has essentially no market value — not a low value, none.
What a buyer actually acquires on a convertible term policy is the option to create a permanent policy and then own it. Their model runs on four inputs: the insured’s life expectancy, estimated in months by two independent medical underwriting firms; the premium required to keep the converted permanent policy in force across that horizon; the discount rate they require on the death benefit; and the transaction’s fixed costs.
The second input is where most term files die. Carriers price conversion products defensively, since people who convert are, as a group, less healthy than people who let coverage lapse. A conversion premium high enough will consume the entire theoretical margin, and the file produces no offer even though the policy is technically convertible. This is why two seemingly identical term policies at different carriers can produce very different answers.
Three details in the conversion provision therefore matter more than anything else: the last date conversion is available, what permanent plans you may convert into, and whether evidence of insurability is required. A conversion right conditioned on health evidence is worthless to an impaired insured and worthless to a buyer. Our explainer on what a conversion rider provides covers the variations, and converting versus selling compares the two paths in numbers.
| Where today sits on the timeline | What is possible | Best action now |
|---|---|---|
| Within 2 years of issue | No sale; contestability risk | Wait; confirm the conversion deadline in writing |
| Past contestability, conversion open, insured 72+ impaired | A sale may be realistic | Gather documents and shop through a licensed broker |
| Past contestability, conversion open, insured healthy | No market | Price a partial conversion instead |
| Conversion deadline passed, level period continuing | No market | Confirm expiry date; arrange replacement coverage if needed |
| Level period over, premium escalating | No market | Decide whether to keep paying or let it end |
| Pre-need contract assigned to a funeral home | No sale at all | Confirm price guarantee and assignment terms |
Where the Confusion Usually Comes From
Several patterns explain why people believe they hold term insurance from a pre-need company.
The funeral home and the insurer get merged in memory. Families remember the place where they signed, not the company that issued the contract. The insurer’s name appears on the policy; the funeral home’s appears on the funeral contract.
Multiple policies accumulate. A household may hold a pre-need policy from a funeral home, a small home service whole life policy from decades ago, an employer group life certificate, and a level term policy bought in their forties. All four get described as “my life insurance,” and details from one attach to another.
Small monthly premiums feel like term. A modest monthly draft reads as term insurance to most people, but small permanent policies are billed the same way, and they carry cash value and nonforfeiture options that term does not.
Limited-pay contracts confuse the picture. A ten-pay policy that stopped billing years ago can look expired when it is actually fully paid up and permanently in force.
The remedy is mechanical: gather every policy document in the house, list them by issuing company and policy number, and request a written status confirmation on each — in force or lapsed, current death benefit, current owner and beneficiary, cash value if any, premium status, and whether any assignment is on file. That letter costs a stamp and resolves years of uncertainty.
If You Hold Convertible Term: The Request to Send
One written request to the servicing carrier produces everything needed to decide:
- A certified copy of the complete policy, including every rider and endorsement.
- The exact last date the conversion privilege may be exercised.
- The permanent plans currently available for conversion of this contract.
- The premium for each at the insured’s current attained age, quoted at the full face amount and at a partial conversion amount you specify.
- Whether evidence of insurability is required to convert.
- The minimum face amount for a partial conversion.
- Confirmation of the current owner, beneficiary, and any assignment of record.
Partial conversion deserves particular emphasis. Most riders permit it, and converting $75,000 of a $500,000 term policy preserves meaningful permanent coverage at a manageable premium while the balance expires. For families who cannot carry a full conversion, this single feature saves more coverage than any transaction in the secondary market.
On sequencing: do not convert the full policy before shopping it. Converting first commits you to permanent premiums several times your term premium with no assurance an offer follows, and it locks in one product when a buyer might have preferred another. The exception is a conversion deadline weeks away with an uninsurable insured, where converting a portion defensively is sound — losing the privilege is permanent, while a delay in a transaction is not. Our page on selling term insurance generally covers the same sequence across carriers.
Face Amount: The Threshold Nobody Mentions Early Enough
Even a perfectly convertible term policy fails the economics if it is too small. Institutional buyers generally begin at $100,000 of death benefit, and many prefer $250,000 or more.
The reason is fixed costs. A provider must collect several years of medical records and commission life expectancy estimates from one or usually two independent underwriting firms, each carrying a fee in the high hundreds to low thousands of dollars. Add attorney review of the policy and ownership documents, a verification of coverage from the carrier, escrow agent fees, and closing costs. Then add the ongoing obligation to pay premiums and track the insured for the rest of their life. None of that shrinks with the policy, so below a certain face amount there is no price that works for both sides.
This is why the small policies most households actually hold — the $10,000 burial contract, the $25,000 employer certificate, the $15,000 pre-need arrangement — are not sellable, however impaired the insured. Our page on practical minimum policy size covers where the thresholds sit and the narrow viatical exception for terminal diagnoses.
What helps at small face amounts is different and often better: nonforfeiture options on permanent contracts, accelerated death benefit riders that pay part of the benefit early on a qualifying diagnosis, and simply confirming the beneficiary designation is current. The last one takes ten minutes and prevents the most common real problem small policies cause — proceeds going to a predeceased beneficiary and landing in probate.
Iowa Domicile, and Vetting Anyone Who Contacts You
Homesteaders is domiciled in Iowa and supervised by the Iowa Insurance Division, which is unusual among state insurance regulators in that it also regulates preneed sellers of cemetery and funeral merchandise and services, under a separate chapter of the Iowa Code from the insurance code. That means an Iowa consumer with a question about a pre-need arrangement and a question about the underlying policy can start at the same agency.
The transaction itself, however, is governed by the law of the state where the policy owner resides. Roughly forty-three states plus the District of Columbia have life settlement or viatical settlement statutes, most derived from the NAIC Viatical Settlements Model Act or the NCOIL Life Settlements Model Act. They license providers and brokers, prescribe contract forms and required disclosures including disclosure of alternatives to a sale, and grant a rescission period after funding — commonly fifteen days from receipt of proceeds, with each state setting its own term. Iowa’s own life settlement provisions sit in chapter 508E of the Iowa Code; confirm the current text with the Division, since these statutes are amended periodically.
Before sharing anything sensitive: ask whether the caller is acting as a broker, who owes duties to the seller, or a provider, who buys for its own account. Get a license number and verify it yourself on your state department of insurance lookup rather than through a link they send. Refuse any request for an upfront fee — legitimate compensation comes out of a completed transaction. And do not sign a HIPAA authorization until you have decided to proceed, because it releases your medical records.
A free policy review at Pine Lake Life Solutions works from the policy cover page alone, costs nothing, and includes telling you plainly when there is no market — which, for pre-need and small-face coverage, is the usual and correct answer. More background on term generally is at our term life overview.
Frequently Asked Questions
How do I tell a pre-need policy from a term policy?
Pre-need arrangements have two documents: an insurance policy and a separate funeral goods and services contract from the funeral home. They often feature a death benefit that increases automatically each year and a guaranteed cash value table. Term insurance has a level or declining face amount, a stated level premium period, an expiry date, and normally no cash value at all.
Can a pre-need funeral policy be sold to a buyer?
Generally no. The death benefit is assigned to a funeral home, usually irrevocably, so the owner no longer controls where the proceeds go. Face amounts in this category also sit far below the threshold at which any life settlement market operates. Request the assignment document to confirm whether it is revocable before considering any alternative.
What if my term conversion deadline already passed?
Then the policy has no secondary market value, and the useful questions become when coverage actually ends and whether replacement coverage is needed before that date. Check as well for a return of premium feature and for an accelerated death benefit rider, both of which occasionally exist on term policies and can produce value without any sale.
Is a $25,000 term policy worth shopping to buyers?
Rarely. Fixed transaction costs, including two life expectancy reports, legal review, escrow, and lifetime tracking, do not shrink with the policy, so most institutional buyers start at $100,000 of death benefit. A narrow exception exists at the viatical end of the market when the insured is terminally ill, and even those buyers usually set a floor well above $25,000.
Someone called offering to buy my policy. How do I check them out?
Ask whether they are a licensed broker, who owes duties to you, or a provider buying for its own account, and get their license number. Verify it yourself on your state department of insurance website rather than a link they provide. Never pay an upfront fee, and do not sign a HIPAA authorization until you have decided to proceed.
I have several small policies. Can they be combined for a sale?
No. Buyers evaluate each contract separately, and three $10,000 policies do not add up to a saleable $30,000 asset. They can, however, be combined in your own analysis: total the cash surrender values, confirm the beneficiary on each, and check each for an accelerated death benefit rider. That review frequently uncovers more value than a sale would have.
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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
- What Is The Contestability Period
- Minimum Policy Size For A Life Settlement
- Can I Sell A Final Expense Policy
- Sell My Homesteaders Term Policy
- Sell My Homesteaders Final Expense 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.