How the resale insurance market in Singapore works—and when to use it

If you're thinking about cancelling your life insurance policy, the most common path is to surrender it—terminate the plan and receive a payout from the insurer, usually referred to as the surrender value. But that option, while familiar, may not be the most financially advantageous.

What many policyholders don’t know is that life insurance is considered a transferable asset in Singapore. That means it can be sold to a third party, not just surrendered back to the issuing insurer. This practice is called insurance policy assignment, and it forms the basis of what’s known as the resale insurance market.

In the resale market, buyers—typically institutional investors or private individuals—purchase in-force life policies and continue paying the premiums. In return, they receive the maturity or death benefits. For the original policyholder, this arrangement may result in a lump-sum payout that’s higher than the surrender value.

So why isn’t this better known?

The resale market is legal, permissible under MAS regulations, and has operated quietly in Singapore for several years. But because it falls outside conventional distribution channels and does not offer direct commissions to financial advisers, awareness remains limited—even among industry professionals. For those considering giving up a life policy, understanding this option is more than theoretical. It may translate into real financial gains, especially in scenarios where liquidity is urgently needed but protection needs have already been met elsewhere.

Surrendering a policy means terminating it and accepting the insurer’s calculated surrender value. This value is typically lower than the total premiums paid, especially in the early years. It reflects the insurer’s assumptions about cost recovery, time value of money, and policy structure.

Assigning a policy in the resale market means selling the legal rights of the policy to a new owner. The buyer assumes responsibility for future premium payments and receives the eventual payout. In return, you—the original owner—receive a lump-sum payment from the buyer.

Here’s where the core difference lies: surrender value is determined solely by the insurer, often using conservative assumptions. Resale value, by contrast, reflects broader market interest and investor appetite—especially for policies with high maturity values or strong historical returns.

Both paths have legal footing:

• The right to surrender is built into all traditional policies.
• The right to assign is also contractually and legally supported under Singapore law. Most life insurance policies include assignment clauses that permit transfer to third parties.

But not all policies are equal in resale appeal. Whole life and endowment plans with participating bonuses and a clear maturity profile tend to fetch more interest. Term plans, or those with irregular premium structures, may be excluded altogether.

1. For Retirees With Surplus Protection

Older policyholders who no longer require extensive life protection—because children are grown, debts are cleared, or coverage overlaps—may find themselves holding underutilized insurance. Instead of surrendering, they could extract better value through resale.

• Surrender Value: Often depressed due to policy age or reduced bonuses.
• Resale Value: Can be significantly higher if maturity is approaching.

2. For Mid-Career Policyholders in Transition

For individuals undergoing a career pivot, relocation, or facing short-term cash flow stress, surrendering a policy may feel like the only option. But if protection needs remain met elsewhere (e.g. via employer coverage or other plans), selling the policy could preserve long-term value.

• Key Consideration: Only assign if you no longer need the payout protection.

3. For Financially Stressed Families

Where affordability is the core issue and lapsing the policy is the alternative, the resale market can serve as a form of policy rescue. The transaction provides liquidity without default.

• Policy lapse: Yields no recovery.
• Surrender: Recovers partial value.
• Resale: May restore more than 100% of paid premiums.

4. For High Net Worth Individuals and Trust Structures

Some wealthy individuals or estate trustees may assign policies to rebalance portfolios, liquidate aging assets, or reinvest elsewhere. In these cases, the resale value can be used as part of broader tax, trust, or legacy planning—subject to structuring and valuation.

Despite the legality and strategic use cases, policy assignment remains poorly understood. The most frequent misconceptions include:

“Selling your policy is illegal or unethical.”
False. Assignments are contractually permitted and regulated. MAS does not prohibit such transactions, and in fact, legal assignment has long been part of Singapore’s contract law framework.

“Only insurers can buy back your policy.”
Untrue. While insurers are obliged to accept surrender requests, they are not the only lawful counterparties. Any entity willing to pay fair value can purchase a policy via assignment.

“You must be terminally ill or over a certain age to qualify.”
Not in Singapore. While US and UK markets may offer viatical settlements for terminally ill policyholders, the Singapore resale market operates more broadly. Policies with consistent value—even from relatively young policyholders—can be assigned.

“The buyer profits from your death.”
While technically accurate in the case of death-benefit claims, most investors focus on maturity values, not morbid arbitrage. In fact, institutional buyers prefer predictable yields over uncertain mortality events.

“Financial advisers will always tell you about this option.”
Not necessarily. Because resale assignment does not typically generate adviser commissions and falls outside most financial advisory training, many advisers omit this option during reviews.

If you're considering policy surrender, ask yourself the following:

1. What is my policy’s current surrender value?
Request a formal calculation from your insurer. This will serve as your benchmark.

2. What is the policy’s remaining term or maturity date?
Shorter-dated policies tend to attract more buyer interest.

3. Am I adequately protected by other means?
Never assign a policy that still forms a core part of your risk coverage.

4. Is the policy transferable?
Check the assignment clause in your contract. Most whole life and endowment policies are, but it's worth confirming.

5. Can I obtain an independent resale quote?
Engage a resale insurance platform or broker licensed by MAS. Compare offers to your surrender value before deciding.

6. What are the tax implications?
Policy assignment is generally not subject to income tax in Singapore. However, gains may affect estate or trust structures depending on how proceeds are used.

7. Am I comfortable with the idea of a third party owning this policy?
Emotional readiness matters. The decision is irreversible once completed.

The resale insurance market in Singapore gives policyholders a rarely discussed exit route—a way to turn dormant or unneeded life policies into potentially higher-value assets. But it is not a one-size-fits-all solution. For those under-insured or mid-way through a dependent-care phase, surrender or assignment may do more harm than good. For others—particularly those who no longer need the policy, or face affordability pressures—it may offer a better-than-surrender path.

Financial practitioners should treat this as a valid strategy, not a fringe alternative. The fact that it operates outside traditional sales channels doesn’t reduce its legitimacy or potential value to clients. Just as with housing, CPF, or portfolio rebalancing, life insurance should be revisited periodically—not only for gaps in coverage but for opportunities to unlock value. This is especially true in times of economic stress, rising cost of living, or shifts in family structure. If a policy no longer serves its original intent, then keeping it for sentiment alone may come at a cost.

Being able to assign a policy doesn’t mean you always should. But knowing it’s an option gives you leverage—and in personal finance, informed flexibility often beats default surrender.