Term insurance has secondary-market value only while the conversion privilege is open, and at this carrier there is a second question worth asking that almost nobody does: what is on the conversion menu. OneAmerica’s permanent business is heavily oriented toward care solutions, whole life contracts carrying long-term care benefits, written through The State Life Insurance Company. If a design of that kind is available as a conversion target, it may be worth more to a household than either keeping plain term or transferring a converted policy, because it addresses the risk most families at these ages actually face.
Before any of that, establish one thing. Is your coverage an individual policy you own, or a group certificate through an employer? OneAmerica writes a great deal of workplace and voluntary benefits coverage, and group certificates cannot be assigned to a buyer at all. If yours references a group policy number and names an employer as policyholder, the rules are different and the deadline is much shorter. Our page on group and small OneAmerica coverage covers that path.
In This Article
- Confirm the deadline, then get the menu
- Why a care-benefit conversion may beat both alternatives
- What a term policy is actually worth, and to whom
- Which company issued it, and who regulates the transaction
- Documents, order of operations, and what to avoid
- The honest summary
- Frequently Asked Questions
Confirm the deadline, then get the menu
The conversion privilege is the right to exchange a term contract for permanent coverage from the same insurer without new evidence of insurability. It is the reason a term policy can matter to someone whose health has changed, and it is the only basis on which a term policy can eventually be transferred.
It expires on its own terms, usually at the earlier of the end of the level premium period or a stated attained age, and the age cutoff normally arrives first. Read your own contract’s conversion provision rather than a description of someone else’s, because filings and endorsements differ.
Send a written request for six items and keep the reply: the last permitted conversion date; the complete list of permanent plans available for conversion today; whether any plan with long-term care or chronic illness benefits is among them; whether partial conversion is permitted and the minimum converted face amount; whether pricing is at original age or attained age; and a premium quote at each available plan and at two or three different converted face amounts.
That third item is the one people leave out and it is the reason this page exists. Ask it explicitly. Also do the calendar arithmetic: conversion application, policy issue, then any settlement process involving medical record retrieval and independent life expectancy reports, does not compress into weeks. If the deadline is inside about ninety days, convert first and decide about a transfer afterward. See what a conversion rider is.
Why a care-benefit conversion may beat both alternatives
Compare three outcomes for a 72-year-old holding a $400,000 term policy that is about to become unconvertible.
Let it expire. The family receives nothing. The premiums paid over twenty years bought protection during the years it was needed, which was the point, but nothing remains.
Convert to a plain permanent policy and transfer it. A buyer prices the death benefit against a life expectancy and the premium stream, and pays a lump sum. That sum is real money, and in a household that cannot pay the converted premium it can be the correct answer. But the family gives up the death benefit permanently, and the proceeds are taxable under a framework that depends on basis and on the insured’s health status.
Convert to a design carrying long-term care benefits. The household now holds a permanent policy whose death benefit can be accelerated to pay for qualifying care, with continuation of benefits designs extending care benefits beyond the death benefit itself. Benefits paid under a qualified long-term care rider are generally received free of federal income tax, a treatment expanded by the Pension Protection Act of 2006 with effect from January 1, 2010.
The third route is not always available and is not always affordable; conversion menus vary and a care design carries its own premium. But when it is available, it converts a term policy that was about to disappear into coverage against the risk most likely to drain the household’s savings. Ask about it before you assume the choice is only between expiry and a sale. See settlement versus a long-term care rider.
What a term policy is actually worth, and to whom
Be clear-eyed about the unconverted contract. Level term builds no cash value, cannot be surrendered for anything, and terminates on a fixed date. A buyer purchases a death benefit it expects eventually to collect, so a policy guaranteed to expire before the insured dies has no value to anyone at any face amount. That is structure, not negotiation. Our page on whether a term policy with no cash value is worth anything makes the same point with worked numbers.
One clarification that comes up constantly: a 1035 exchange is not a sale and does not apply here. Section 1035 of the Internal Revenue Code permits a tax-free exchange of one life insurance contract for another, or into a qualified long-term care contract, but it requires an existing contract with value to exchange. A term policy with no cash value has nothing to move. Conversion, which is a contractual right under the term policy, is the mechanism that applies, not an exchange. See what a 1035 exchange is and how it differs from a settlement.
After conversion, the policy is valued like any other permanent contract. The qualifying profile is a face amount of $100,000 or more, an insured roughly 70 or older or a younger insured with meaningful documented health impairment, and a policy past its two-year contestability period. A healthy insured in their early sixties draws no offer, because a long projected life expectancy means a long premium stream that consumes the discounted benefit. A partial conversion leaving under roughly $50,000 falls below the size the market underwrites at all.
| Path | What the family ends up with | Cost to you | Best when |
|---|---|---|---|
| Let the term expire | Nothing | None | Coverage is genuinely no longer needed |
| Convert a reduced amount and keep it | Permanent death benefit | A sustainable ongoing premium | Coverage still matters and can be afforded |
| Convert to a care-benefit design | Death benefit plus care benefits | A higher premium, if available | Long-term care is the household’s bigger risk |
| Convert and transfer the policy | A taxable lump sum now | Loss of the death benefit | Premium unaffordable and expiry is the alternative |
| Miss the conversion deadline | Nothing, permanently | Everything paid so far | Never; this is the outcome to prevent |
Which company issued it, and who regulates the transaction
OneAmerica Financial is an Indianapolis-based mutual holding company group. Its principal insurer is American United Life Insurance Company, founded in 1877 as the German Mutual Life Insurance Company of Indiana and renamed American United Life in 1936 after a merger. The State Life Insurance Company, also Indiana-domiciled, writes the care solutions line. Pioneer Mutual Life Insurance Company of Fargo, North Dakota affiliated with American United Life in 1997, and older Pioneer Mutual contracts are administered within the group today.
In a separate corporate move, Voya Financial acquired OneAmerica’s full-service retirement plan recordkeeping business in a transaction that closed in January 2022. Life insurance certificates and policies did not move in that transaction, but retirement plan statements now come from a different company, which is a common source of confusion when families are inventorying documents.
The domiciliary regulator is the Indiana Department of Insurance. Indiana’s viatical and life settlement provisions are codified at Indiana Code section 27-8-19.8, covering licensing of providers and brokers, disclosure obligations, written medical authorization, and a statutory rescission right. The transaction itself is governed by the law of the state where the policy owner lives, so verify your own state’s act and confirm with your own insurance department that any counterparty is licensed there. That check takes minutes and an unlicensed counterparty is the clearest warning sign in this market.
Documents, order of operations, and what to avoid
Work the sequence in this order and gather documents as you go.
- Establish group or individual from the top of the document and the presence or absence of a group policy number.
- Confirm the conversion deadline in writing and request the full conversion menu, including any care-benefit design.
- Get premium quotes at several converted face amounts, not only the full amount, so you can see what the household can actually sustain.
- Get a preliminary read on whether a transfer market exists based on the insured’s age, health picture and the intended converted amount, before converting.
- Convert, choosing the chassis and amount with the intended use in mind.
- Only then pursue a transfer, if that is still the right answer, with medical records already gathered.
The documents required are the policy cover page and schedule, the conversion provision or endorsement, the written conversion quote and deadline, the most recent premium notice, and a current medication list with the names and locations of treating physicians. Medical record retrieval is almost always the longest step, so start it early.
Three mistakes cause most of the damage. Letting the policy lapse while deciding, which destroys the asset outright and can make reinstatement contingent on evidence of insurability the insured no longer has. Converting the entire face amount reflexively when a partial conversion at a sustainable premium would have served the family better. And signing an exclusive representation agreement before understanding who is compensated and how much, which is a licensing-level disclosure requirement in most states.
The honest summary
For most people holding a term policy, the best outcome is not a sale. It is a smaller amount of permanent coverage, converted before the deadline, at a premium the household can pay for the rest of the insured’s life, chosen from a menu they actually asked to see. That outcome keeps a death benefit in the family, and at this carrier it may also come with care benefits attached.
A transfer is the right answer in a narrower set of circumstances: the insured is roughly 70 or older or significantly impaired, the face amount is large, the converted premium genuinely cannot be sustained, and the realistic alternative is the policy expiring for nothing. In that situation the comparison is against zero and any positive number wins. That is the case in which the secondary market does real good, and it is worth pursuing properly, with multiple bids rather than a first offer.
Pine Lake Life Solutions does not purchase policies and is not licensed in every state. The free policy review is educational: we read the conversion language and the quotes and tell you which of these outcomes the numbers support, including the common answer that converting a reduced amount and keeping it beats everything else on the table. Send the policy cover page and call (305) 209-7183. For general background see selling a term life policy and whether term life can be sold at all. If a permanent flexible-premium contract also turns up in your file, see OneAmerica universal life policies.
Frequently Asked Questions
Can I sell a term policy without converting it?
No. Level term builds no cash value and terminates on a fixed date, and a buyer purchases a death benefit it expects eventually to collect. A policy guaranteed to expire before the insured dies has no value to any buyer at any face amount. What can be purchased is the permanent policy the term converts into, and the conversion must occur before the privilege expires.
Should I ask whether a long-term care design is on the conversion menu?
Yes, explicitly. This carrier’s permanent business is oriented toward contracts carrying long-term care benefits. If such a design is available for conversion, it may serve a household better than either plain permanent coverage or a transfer, because qualified care benefits are generally received free of federal income tax and address the risk most likely to drain savings.
Is my coverage group or individual?
A group certificate references a group policy number alongside a certificate number and names an employer, association or trust as policyholder, and premiums usually come from payroll or a pension deduction. An individual policy names you as owner with a single policy number and a schedule page. Group certificates cannot be assigned to a buyer; conversion to an individual policy is the only route.
Can I do a 1035 exchange with my term policy instead?
No. Section 1035 allows a tax-free exchange of an existing contract with value into another life policy or a qualified long-term care contract, but a term policy has no cash value to exchange. The mechanism that applies to term is conversion, which is a contractual right in the policy itself, not an exchange. Discuss any tax question with your own advisor.
How much of the face amount should I convert?
Usually less than all of it. Ask for quotes at two or three converted face amounts alongside the full amount, and pick the one the household can pay indefinitely rather than the one that looks impressive. Confirm the minimum converted face amount, because it is sometimes higher than you expect, and letting the remainder expire deliberately is a decision, not a failure.
Who regulates a settlement involving an Indiana carrier?
The Indiana Department of Insurance supervises American United Life and The State Life Insurance Company as domiciliary regulator, and Indiana’s viatical and life settlement provisions are at Indiana Code section 27-8-19.8. The transaction itself is governed by the law of the state where the policy owner lives, which sets your disclosure rights and rescission window. Verify licensure with your own state.
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Related Reading
- Sell Term Life Policy
- What Is A Term Conversion Rider
- Can I Sell A Term Life Insurance Policy
- What Is A 1035 Exchange
- Life Settlement Vs 1035 Exchange
- Life Settlement Vs Long Term Care Rider
- Term Policy No Cash Value Worth
- Sell My One America Final Expense Policy
- Sell My One America Universal Life 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.