Selling old iphone 7

The SIM is linked to your account with the Carrier.

The carrier will not transfer it to a third person.

If you handover the SIm along with your iPhone the person may misuse your SIM for which you will be billed.

valery325 wrote:

Why is it necessary to remove the sim card from my old phone before selling it?

If nothing else, it avoids any possibility of shipping your active cellular plan to somebody else.

If your carrier swaps SIMs as some do, it allows you to swap that SIM into the replacement phone.

(eSIM discussions here ignored.)