Life settlement questions

Straight answers about selling a life insurance policy. If you do not see your question, call us or start your free review.

The basics

• What is a life settlement?

  A life settlement is the sale of an existing life insurance policy to a licensed provider in exchange for a lump sum. The provider takes over the premiums and becomes the beneficiary. The amount offered may be more than the policy's cash surrender value, but it depends on the policy and the person insured.

• Is it legal to sell a life insurance policy?

  Yes. In 1911 the U.S. Supreme Court recognized that a life insurance policy is property that can be transferred. Life settlements are regulated by each state, and licensed providers must follow those rules.

• Who should consider selling a policy?

  People who no longer need their policy, or who find the premiums hard to keep paying, often look at their options. This is most common for people age 70 or older, and for people living with a serious health condition. A free review shows whether a sale may make sense for you.

• What is a viatical settlement?

  A viatical settlement is a life settlement for someone with a terminal or serious illness. People in this situation may qualify, and the process is similar. If this applies to you, choose "Serious or terminal illness" in the form and we will take it from there.

Selling your policy

• What types of policies can be sold?

  Several types of policies can be considered, including:

  • Universal life
  • Whole life
  • Variable universal life
  • Term and convertible term life issued by a U.S. insurance company
  • Joint and second-to-die policies

• How large does my policy need to be?

  Many providers look at policies with a face amount of $50,000 or more. If your policy is smaller, ask us, because it may still be worth a review.

• What is my policy worth?

  There is no standard amount. The face amount, the premiums, the type of policy, and the age and health of the person insured all matter. Our calculator is a good place to start, and a free review gives you a clearer picture.

• Can I sell my policy on my own?

  You can, but a life settlement is a complex legal and financial transaction, and the rules change from state to state. Many people choose to work with a licensed professional who handles the paperwork and finds a buyer.

• Should I work with more than one company?

  Policies that have been shopped by several brokers can confuse buyers and slow things down, which may affect an offer. It helps to ask a company how it works before you agree to anything.

• Who buys my policy?

  Settlement Options refers qualified individuals to The Settlement Group, Inc., a licensed life settlement provider (opens in a new tab). The provider works with buyers who are experienced in life settlements.

• How long does it take?

  The underwriting review can take several weeks, and the whole process usually takes a few weeks from start to finish. Payment is made through a third-party escrow company once the change of ownership is confirmed by the insurance company.

• Do I still pay premiums after I sell?

  No. After the sale, the new owner is responsible for future premiums.

• Why not just surrender the policy?

  Surrendering returns only the cash surrender value, which can be small or even zero. A life settlement may offer more, so it is worth comparing before you decide.

Costs, taxes and privacy

• Does it cost anything to find out?

  No. The free review has no cost and no obligation. Any fees or compensation are explained before you agree to anything.

• Do I have to accept an offer?

  No. You are never obligated to sell your policy or to accept an offer.

• Will I owe taxes on the money?

  A life settlement can have tax consequences, and part of the proceeds may be taxable. We do not give tax advice, so please speak with your own tax professional or CPA.

• Could a sale affect my benefits?

  Receiving a lump sum can affect eligibility for needs-based programs such as Medicaid. Please check with a qualified advisor before you sell.

• How can I use the money?

  The proceeds are yours to use as you choose, for example for care, monthly expenses or retirement.

• Can I change my mind after I sell?

  Many states give you a period after the sale to cancel. The length depends on your state, so ask us about the rules where you live.

• Will my information stay private?

  We keep your information confidential and use it to review your policy and refer you to a licensed provider. Read our Privacy Policy for details.