Before you can estimate how much your insurance may be worth, you’ll need to understand if you qualify to participate in a life settlement. There are three main factors to consider. Life settlement providers prefer that the insured person is over the age of 65. They want permanent life insurance policies and term policies that you can convert to permanent policies with a face value of more than $100,000.  
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Smaller policies may also be eligible for a life settlement, depending on other factors. Investors have fixed costs that the pay for every life settlement, no matter its size. For this reason, smaller policies may be more difficult to sell.  
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You can choose to work directly with a provider, or you can select a life settlement broker. If you work directly with a provider, you will maximize your payout but will be doing most of the work yourself. If you choose to go with a broker, he/she will work to get the largest possible amount of money for your life insurance policy by going through multiple providers. They gather necessary information, negotiate with investors, and serve as your point of contact throughout the life settlement process. Using a broker also reduces the final amount of money you’ll get. Fee structures vary, but the most a broker can charge by law is 30% of the life insurance sale price.  
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There are a few important factors that affect how much money your life insurance is worth. The first is the face value of the policy. The larger the policy, the more money it’s worth. Since the provider, or life insurance buyer, will receive the death benefit they are willing to pay more for larger policies.  
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Policies with lower premiums cost investors less over time, so they are typically worth more than policies with high premiums. When interest rates are low, it costs investors less money to finance their purchases, allowing them to pay more for life insurance policies.  
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The health status and age of the insured person both play a big role in how much investors are willing to pay for a life insurance policy. Policy owners with health issues that give them statistically shorter life expectancies and older policy owners tend to receive more money for their life insurance policies.  
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The average life insurance policy sold in a life settlement results in a payment of 20% of the death benefit, or on average 400% more than the cash value (if there is any). So, an average life insurance policyholder with a $500,000 face value could expect to receive $100,000. When you initiate a life settlement, the provider will offer you a more personalized estimate of your policy’s value. In order for a policy to be profitable for investors, the death benefit must exceed the projected premium payments. Life expectancy plays an important part in whether your life insurance policy is eligible for a life settlement and if so, how much money you’ll receive.  
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A life expectancy underwriter will look closely at the insured person’s medical records and consider their age among other factors to provide investors with an estimated life expectancy. Investors will use this number among others to determine whether purchasing your life insurance policy could provide a profit for them.  
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If you have cash value built up in your policy, it may make the situation more complicated. In this case, your broker will advise you about how to optimize your chances of being able to participate in a life settlement and receive cash for your life insurance policy.  
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There are other ways to get cash out of your life insurance policy. Depending on the type of policy, you may be able to take out a loan. You probably won’t be able to access as much money as you could with a life settlement, but your beneficiaries will still receive a payout upon your death. Taking a loan out against your life insurance policy doesn’t relieve you of the burden of premium payments. If you need a small amount of money in a short amount of time, a loan may be a better option for you than a life settlement. The amount of money you can get depends on the accumulated cash value that’s built up inside the policy. 
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If your policy has been in force for more than three years, you have the option of surrendering it completely for the cash value. After surrender, you’ll no longer pay premiums. If the policy is only a few years old, the amount you can get will be reduced by fees. Surrendering your policy also cancels it, so your beneficiaries will not receive a payout when you die. If you don’t want or need the death benefit and are considering surrendering your life insurance policy, it’s important for you to understand that life settlements pay less than the face value of the policy but more than the surrender value.  
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Taxes are another factor that could impact how much your life insurance policy is worth. Since individual financial situations vary, you should consult a CPA with experience in life settlements to find out whether you’ll face a big tax bill after receiving money via a life settlement. In general, any money you receive as a result of the sale of your life insurance that is less than the total amount of premiums you’ve paid over the years should pass to your tax-free.  
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The best way to understand how much money your life insurance policy may be worth in a life settlement is to consult an experienced licensed broker. So many factors go into formulating a life settlement offer that doing a bit of research and contacting a provider is a smart move.   ​

The life settlement industry is well-established and well-regulated in America. 43 states have laws that govern life settlements and protect consumers from fraud. These laws give more than 90% of Americans the right to safely sell their life insurance policies instead of letting them lapse or cashing them in for a fraction of the premiums they’ve paid over the years.  
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Both cashing in a life insurance policy and letting it lapse relieve the policyholder of the burden of paying ongoing premiums. These actions cancel the policy, so there’s no death benefit to the beneficiaries in the future.  
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A series of lawsuits against life insurance companies across the country alleging that the companies failed to inform their clients of the life settlement option in order to generate greater profits has brought the issue to light for lawmakers.  
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A life settlement offers the policyowner more money than they would receive if they cashed in their life insurance. Lawmakers recognize that life settlements can provide consumers with the money they need in exchange for an obsolete, unwanted, or unaffordable insurance policy.  
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NCOIL Life Insurance Consumer Disclosure Model Law 

The NCOIL Life Insurance Consumer Disclosure Model Law requires insurance companies to let policyholders know about life settlements as a potential alternative to letting a policy lapse or cashing it in. While the laws vary greatly from one state to the next, they all exist to provide the consumer with the information they need to make good financial decisions.  
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For example, in Kentucky and Washington, the insurance commissioner has the power to define triggers that compel insurance companies to notify policy owners of life settlements as an alternative to lapse or surrender. In Oregon, a more specific statute states that an insurer will “provide notice to the owner of an individual life insurance policy when the insured person under such a policy is 60 year of age or older” upon the insured person notifying the company that they wish to surrender the policy in part or in whole, or if the owner requests an accelerated death benefit.  
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In Maine, Washington, and Kentucky, laws require insurance companies to notify insured people over the age of 60, those that become terminally ill, and those that become chronically ill, that life settlement is an option.  
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Disclosure laws 

In Georgia, lawmakers recognize that seniors often surrender life insurance policies so they can qualify for Medicaid. They formed a committee to study life insurance issues as they apply to seniors. In 2016, Georgia was the first state to pass a law that prevents life insurance companies from penalizing insurance agents who tell their clients about alternatives to surrendering or lapsing life insurance policies.  
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When a policyholder allows their insurance to lapse or surrenders it for the cash value, the life insurance company never has to pay a benefit. In fact, the premiums that the policy owner paid over the years are pure profit for the insurance company. The London Business School conducted a study in 2014 showing that Americans who sold their life insurance policies through a life settlement receive more than four times the amount of money that they collectively would have if they had simply surrendered the policies for their accumulated cash value.  
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The insurance industry lobbies against legislation for consumer disclosure about the life settlement option.  
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Waiting periods 

30 of the 43 states with laws in place to regulate life settlements have a mandated two-year waiting period before a life insurance policy is eligible for sale. 22 states enforce a 5-year waiting period. Selling the policy before the waiting period is allowed under certain circumstances, such as terminal illness, divorce, physical or mental disability, chronic illness, or retirement.  
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The only states that do not regulate life settlements are Michigan, New Mexico, Missouri, South Dakota, Washington D.C., Wyoming, South Carolina, and Alabama. However, Missouri has a one-year contestability period and the other unregulated states have a two-year contestability period under their insurance code.  
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Required transparency is consistent with state laws 

A key point of life settlement laws is the call for transparency. Consumers have the right to see all offers to purchase their life insurance policy in writing. Brokers must disclose their fee structure in writing when asked. Many states also require that consumers receive information about possible tax ramifications, alternatives to settlements, and potential risks of losing government assistance.  
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Life settlement brokers and providers must hold the appropriate licenses in the home state of the policy owner. Many states require that life settlement companies submit forms for escrow agreements, disclosures, and the life settlement contract for approval, as well.  
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The life settlement industry exists to serve seniors who no longer need their life insurance policy 
Legislators continue to introduce new laws that help educate seniors about to access Medicaid that they can use proceeds from a life settlement to help pay for their long-term care.  
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Life settlement proceeds have the potential to prevent many seniors from accessing Medicaid, providing a huge social benefit to Americans. In Texas, a Medicaid Life Settlement bill has helped many seniors better understand their options regarding their financial assets.  
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Life settlement safety 

The best way to keep your privacy intact, protect your personal information, and get a fair price for your life insurance policy through a life settlement is to learn as much about the process as possible. Educate yourself about your state’s laws.  
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Life settlement laws are always changing. For the most part, they exist to protect consumers. One advantage to having a broker represent your interests in a life settlement is that they can be your single point of contact regarding your state laws and any applicable federal regulations.  ​

The benefit to the policyholder is that they no longer have to pay premiums to keep the policy in force. Instead of surrendering the policy back to the insurance company and receiving nothing, or turning it in for its cash value, the policyholder gets a lump sum of money to do with as they please.  
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Here’s what you need to know about life settlements to understand if selling your life insurance policy may be the right move for you: 

Do you meet the basic eligibility requirements?  

Most life settlement participants are over the age of 65 and have a permanent life insurance policy with a face value of more than $100,000. People who are younger but have a terminal illness with a diagnosis of fewer than 24 months to live may be able to sell their life insurance policy through a viatical settlement.  
You need to initiate your life insurance policy more than two years before you can transfer ownership to another party.  
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If you have a term life policy, it may be possible to convert it to a permanent policy and then sell it through a life settlement. A life settlement broker can help you determine if converting your policy is an option.  
Do you need the benefit that the life insurance policy provides upon your death? 
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Many seniors find that after their children are grown and self-sufficient, they no longer need to maintain a life insurance policy with a large benefit amount. In this case, the policy premium may seem like a pointless financial burden.  
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If you don’t need to leave money to heirs, and you aren’t interested in the option to take out a loan against your cash value life insurance policy, you can exchange those benefits for cash through the life settlement process.  
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Have your life insurance premiums become unaffordable? 

The rising cost of healthcare causes financial hardship for many people near and past retirement age. Selling a life insurance policy can help stabilize a financial situation in two ways. It eliminates an expensive premium and it provides a much-needed infusion of cash.  
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Are you looking for ways to add to your retirement nest egg?  

For some people, selling their unwanted or unneeded life insurance policy is a great way to add financial security to their retirement. There may be a benefit to taking cash now and removing the expense of an ongoing life insurance premium from the budget.  
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If you decide to participate in a life settlement, you can expect to receive more than the policy’s cash surrender value, and less than its face value. This may represent a significant amount of money. 
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As life expectancies increase, seniors in relatively good health may wonder how they’ll fund a retirement that could last 30 years. It can be difficult to plan for financial stability when you need to make your savings last three decades.  
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A recent survey indicates that older Americans are generally more concerned about running out of money than they are about dying. In fact, 33% of Americans currently haven’t saved anything for retirement. Only 31% of seniors have more than $10,000 in savings for retirement.  
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Those nearing retirement who aren’t comfortable with the amount of money they’ve saved many not feel like there are many options. Not having to depend on Social Security for 100% of income in retirement is a major concern, and selling a life insurance policy through the life settlement process is one way to help add some bulk to retirement savings.  
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Have you researched the life settlement process?  

The best way to find out if a life settlement is a good option is to learn as much about the process as possible. There are many reliable sources of information available.  
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The Life Insurance Settlement Association (LISA) is an organization that sets standards for life insurance investors and brokers. Their goal is to educate consumers on the regulations and advantages of participating in a life settlement, as opposed to surrendering a life insurance policy and receiving nothing for it.  
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People interested in learning about life settlements should research their state’s laws about the process, as they vary widely depending on where you live.  
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Whether you ultimately choose to sell your life insurance policy through a life settlement or keep the policy in force, it’s crucial to understand your options. Seniors give up $112 billion in benefits each year when they choose to surrender their life insurance policies or let them lapse. The policies are then terminated, and the insurance company keeps all of the premiums paid over the years.  
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Of that $112 billion in potential benefits that seniors give up, 250,000 life insurance policies with a total face value of $57 billion could be sold through a life settlement with the policy owner reaping the financial benefits instead of the insurance company. The life settlement industry currently serves less than 1% of the possible market in America, so education is paramount.  
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Up until you receive funds from an investor in exchange for your life insurance policy, at any point in the process, you can change your mind and retain or regain full ownership of your life insurance. Qualified and reputable brokers don’t charge fees upfront, so all of their research about what your policy may be worth is free. For this reason, learning about life settlements and whether selling your policy may be the right financial move for you is always a good idea.  ​

Selling your life insurance policy is an effective way to receive a lump sum of money and eliminate an expensive premium payment from the budget for many seniors. If your policy no longer fits your situation, you can gain access to cash by selling your life insurance to institutional investors.
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The process is called a life settlement. It’s well-regulated and as the industry grows, so does the average policy owner’s access to information about how to turn an unwanted life insurance policy into cash.
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With a life settlement, you are in control of how you use your life insurance policy. If you no longer need to provide for the financial well-being of dependents, but you would like to add to your retirement savings or use the money to pay for rising healthcare costs, selling your life insurance policy could be the answer. Of course, you can do anything you want with the money you receive from a life settlement.
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The first thing you must do is find out if the type and size of your life insurance policy are eligible for a life settlement. Investors look for certain types of policies. Typically, a permanent life insurance policy insuring a person who is over the age of 65, with a face value of more than $100,000 qualifies.
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Some term life insurance policies and smaller policies may also qualify for a life settlement. It’s easy and free to get an estimate of what your life insurance policy may be worth, should you decide to sell it.
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People who are terminally ill, with a life expectancy of fewer than two years, may also decide to sell their life insurance policy for cash. This process is called a viatical settlement.
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Selling your life insurance policy with the help of a broker

You can sell your life insurance company to an investor yourself, or you can enlist the help of a licensed broker. A broker will communicate with different investors on your behalf. Their goal is to get you the most money for your policy. The majority of life settlements involve a broker. If you decide to use a broker, they’ll take a percentage of the sale of the policy as commission.
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Some policy owners prefer to bypass the broker and deal with the investor on their own. This means they won’t have to pay the broker’s fees, but they also won’t get multiple offers for their policy. Some people who want to sell their life insurance policies choose to use a broker because they want someone who understands the industry to work on their behalf.
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The broker or provider will need details about your life insurance policy. You’ll also give them access to your medical records, so underwriters can determine your life expectancy. Throughout this process, state and federal laws protect your personal information and identity. The process should be transparent, so it’s important that you discuss any concerns you have with the broker or provider.
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If you decide to use a broker, they will contact providers on your behalf to gauge interest in the policy. When they get an offer that they feel is a good representation of the policy’s value, they’ll contact you with the information.
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When you decide to sell your life insurance policy

Before you choose to sign your policy over to the provider, it’s important to consult your CPA or a tax professional. In most cases, proceeds from a life settlement aren’t subject to income tax, but since everyone’s situation is different.
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If you agree to the settlement amount, the policy buyer will start the closing process. You’ll receive a packet of documents to review and sign. Among the paperwork, you’ll find a Transfer of Policy Ownership and an Agreement of Sale.
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When the policy buyer receives the completed paperwork, they’ll fund an escrow account with the amount of money you agreed to receive in exchange for your life insurance policy. You’ll be able to verify that the money is in the escrow account.
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The policy buyer will submit the signed paperwork to your insurance company, so they can become the policy’s beneficiary. They will also take over premium payments.
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An escrow agent will verify that all terms of the agreement have been met. They’ll transfer the money in the escrow account to you, and you’ll no longer be responsible for paying premiums on the policy.
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After you receive money for your life insurance policy

Even after you receive the funds, you have a rescission period mandated by insurance regulation. So, if you change your mind after the process is complete within that time period, you can return the money and regain ownership of (as well as responsibility for) your life insurance policy. The rescission period varies
according to your state of residence. Your life settlement broker or the investor can offer you details about the timeline of the life settlement process, including the rescission period.
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After your life settlement is complete, you have received the money, and your rescission period has passed, the sale is irrevocable. The provider that purchased your life insurance policy may make contact with you occasionally so they can update your life status and adjust their projections for their investors. They may also data tracking methods to receive alerts when you die so they can file a claim with the insurance company.
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Investors usually buy groups of life insurance policies, so no one person experiences significant financial gains as a result of another’s death. If you decide to sell your life insurance policy through the life settlement process, either with a broker or on your own, your personal information is protected by federal and state privacy laws.
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Remember, when you have questions throughout the life settlement process, your broker is there to help. Your life insurance policy is a valuable financial asset and should be treated as such. When the policy no longer meets your needs, it’s within your legal rights to sell it for a lump sum of money.
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After you receive the funds for your life insurance policy, you can do what you choose with the money.

Selling a life insurance policy through a life settlement is a process most people will experience only once in their lives. It’s becoming a mainstream financial product as seniors seek new ways to fund their retirement.  
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There are two main types of companies in the life settlement industry. Brokers work on behalf of the original policy owner to find a buyer for the policy. While they don’t charge fees upfront, the policy owner pays a commission to the broker if they decide to sell the policy. Providers work for investors, or groups of investors, that purchase life insurance policies from individuals and from brokers.  
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Because it’s unfamiliar territory, and to get the best possible offer for their policy, many people choose to use a life settlement broker. This relationship is completely optional. Whether you use a broker to facilitate the sale of your life insurance policy depends on your personal goals, how familiar you are with the life settlement process, and personal preference.  
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If you decide to go directly to a provider 
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Providers hold special licenses that allow them to legally purchase multiple life insurance policies on behalf of investors. Some providers are also investors. In any case, a life settlement investor will always use providers for origination. Providers calculate their offer for life insurance policies by using algorithms that consider the insured person’s life expectancy, current interest rates, and the characteristics of the policy.  
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If the provider is FINRA registered and licensed as in investor, they can resell life insurance policies after purchasing them. They may also sell fractional interests in life insurance policies.  
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If you decide to go through the life settlement process without the help of a broker, you’ll need to choose a provider on your own. This method of selling your life insurance policy bypasses broker’s fees that may be as high as 30% of the total sale price. It may also speed up the process since you won’t be waiting for a broker to solicit multiple competing offers for the policy.  
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Finding a company to buy your life insurance company can be difficult for people who aren’t familiar with the industry. If you decide to start the process without the help of a broker, consult an accountant to learn about your potential tax liability and a financial advisor with experience in life settlements to help you understand your state’s rules about selling life insurance to investors.  
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A financial advisor can also inform you about how receiving money from a life settlement may affect your eligibility for government assistance if you receive it. They can also review your current financial situation and talk with you about whether creditors may have a claim on proceeds from your life settlement.  
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Remember that the first offer may not be the best offer, so although it may take longer, it pays to get an estimate of what your policy is worth from more than one provider.  
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If you decide to speak with a broker 
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In most states, life settlement brokers must hold a valid license issued by the state where the policy owner lives. Before choosing a broker, find out whether they are licensed to conduct business in your state. Ask potential brokers if they will actively seek qualified buyers to get the best possible offer for your policy, or if they work with only a few specific providers.  
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Brokers should market your life insurance policy to providers that are large institutional investors. These buyers have experience with risk management and can ensure privacy throughout the entire transaction. Your broker is your single point of contact. You’ll fill out one application and the broker will send it to the companies they feel are likely to offer the most money for your policy.  
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The process may take longer if you use a broker because they’ll negotiate with multiple providers. An experienced life settlement broker understands the marketplace and how best to present your policy to potential investors.  
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A reputable broker will offer to speak frankly about their commission rates and offer you the information in writing. The largest commission they are allowed to charge by law is 30%. You should never be asked to pay fees upfront. The broker will handle all fees associated with processing your medical records, hiring an independent life expectancy underwriter, and contacting your insurance company for details about your policy.  
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The broker will openly discuss their company’s privacy policies as they apply to your personal and private information. To get offers from providers, they must share your medical records, personal information, and policy information with them.  
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When you receive offers from providers for your life insurance policy, your broker will present them to you in writing. They should be transparent about who the buyers are, as well.  
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No matter which life settlement company you choose, remember that this is a well-regulated industry with laws to protect the privacy and financial interests of consumers. In 43 states, there are laws about life settlements. In some states, consumer protection rules state that insurance companies must inform their clients about the life settlement option as an alternative to letting the policy lapse or surrendering it in exchange for the cash value.  
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Choosing a provider or broker is a personal decision. If you aren’t sure what to do, it may help to speak with more than one broker to find out what services they offer, their track record with previous clients, and their rates.  
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No matter which route you choose, remember that you are never obligated to sell your life insurance policy. Most states have laws that ensure that the policy owner is in control during the entire life settlement process. Even after you receive the funds and sign over the policy to the provider, you have a period during which your allowed to change your mind, return the money, and resume ownership of your life insurance policy.  ​