There are many reasons to purchase life insurance policies, most related to the need to provide for family in the event of early death or to provide funds to pay federal estate taxes. But for some people, the need to maintain life insurance may end.
For many years, the way to deal with this situation was to surrender the policy to the insurance company that issued it and to receive the cash surrender value. The cash surrender value was often less than the total of premiums paid. Some commentators analogized this situation to buying a house from a builder and then, if the owner wished to sell it, being able to sell it only back to the builder, who established the sale price. Whether or not that is a good analogy, a new business developed in recent years: having a third party buy the policy and hold it to maturity — that is, until the death of the insured. As a consequence, the policy would remain in effect and the new owner would pay the ongoing premiums.
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