Life Policy Owners

Why Sell?

Like any personal property, your life insurance can be sold through a life settlement.

What is a life settlement?

A life settlement is the sale by the owner of a life insurance policy to a third party for an amount greater than its cash surrender value and less than the death benefit. The seller of the policy receives a cash payment. The buyer of the policy assumes all future premiums payments and receives the death benefit upon the passing of the insured.

Watch the video below to a learn a little more about your money and your life insurance.


Each year more than $100 billion face value of life insurance lapses by seniors over the age of 65 – mostly from a lack of knowledge that an unneeded or unaffordable policy may be sold.

There are numerous reasons to consider selling a life policy:

  • The premiums are no longer affordable

  • The need to replace lost income in case of death of the insured no longer exists

  • The need for funds to pay estate taxes no longer applies

  • There is a need for resources to pay for health expenses and long term care

  • A term policy may be reaching the end of the coverage period

  • Funds are wanted to improve a retirement lifestyle

The sale of a life policy is not for everyone. 
There are alternatives other than selling a policy that may be appropriate for a policy owner’s circumstances:

  • Keep the policy inforce through a loan or use of the cash surrender value

  • Seek an accelerated death benefit, if available

  • Assign the policy as a gift or charitable contribution

  • Covert a term policy to permanent insurance

  • Reduce the death benefit with a lower face value and lesser premiums

  • Lapse or surrender the policy


Anyone considering a life settlement should first talk with their insurance, financial and/or legal advisor to explore all legal, tax and other consequences from selling their policy. 


Do I qualify?

In general, the following qualification criteria applies:

Age and health status of insured:

Seniors who are age 65 years or older. Younger insureds may qualify, depending on certain medical conditions.

Type of insurance policy:

LISA members can help you with every type of insurance policy, including term insurance.  However the majority of policies sold in the secondary market for life insurance are universal life insurance policies. 

The life insurance policy premiums:

The amount of the premium payments to keep the policy in-force will also play a role on the offer amount. 

Life insurance policy death benefit (face value):  

Life insurance policies with death benefits of more than $100,000 are most desirable. However, some smaller policies can be sold.    

Consumer Tips:

Policies may be owned individually or through a corporation, foundation, trust, non-profit organization or business. It is also very important that all beneficiaries understand the process, agree to the sale and are actively involved in the sales process.

How much can I get?

Selling your life insurance policy

When you sell your insurance policy, you receive a cash payment.  The buyer pays all future premiums and receives the death benefit when the policy matures (when the insured dies). 

Every case is different. The amount you receive will depend on:

  1. The death benefit/value of the policy – amount investor receives at the death of the insured
  2. The annual premiums – the amount of premiums that will be paid until the insured dies
  3. The number of years premiums will need to be paid – the remaining expected life of the insured
  4. The rate of return the buyer of the policy requires to make the investment

The amount received from a policy is a mathematical determination that takes into account the impact that each of the factors has on the value.  The higher the premiums, the longer the life expectancy and the higher the required investor’s return, the lower the value of the policy. Conversely, the lower the premiums, the shorter the life expectancy and the lower the investor’s required return, the higher the value of the policy.  

The amount received from selling a policy will always be greater than the cash surrender value and less than the death benefit value.


Cash Meter Example

“Americans who sold their unwanted life insurance policies, collectively received more than four times the amount they would have received had they surrendered them to their life insurance companies.”
London Business School Study, 2014

“US policy owners received 4-8 times more than the policy cash surrender values from life settlements from 2006-2009."
US Government Accountability Office (GAO) Study, 2010

Consumer Tip:

Life settlement transactions are complex. Anyone considering a life settlement should first talk with his or her insurance, financial and legal advisors and work with members of the Life Insurance Settlement Association.

Selecting an Advisor

Understanding the parties involved 

When a policy owner decides to explore whether selling a life insurance policy is a good option for their unique circumstances, the owner or his/her financial advisor should start the process by contacting a member of the Life Insurance Settlement Association who is either a life settlement broker or provider.

Consumer Advisors:

  • Life settlements can be complex financial transactions and are generally conducted on behalf of clients by experienced professional advisors.
  • When representing a client, financial professionals have a duty to represent the best interests of that client.
  • Compensation for service can be paid by fee or, if licensed, by commission.
  • Financial professionals recognize that life settlement regulation varies by state. It is important to know which laws and regulations – if any – apply in your state.

It’s possible to sell your policy through a Life Settlement Broker or Provider

Life Settlement Brokers:

  • Connects the sellers of an insurance policy with buyers.
  • They represent the policy owner and negotiate the offer that best serves the needs of the seller, which may be accepted or rejected by the policy owner.
  • They owe a fiduciary duty to the policy owner.
  • A Broker does not include an attorney, certified public accountant or financial planner retained in the type of practice customarily performed in their professional capacity to represent the owner whose compensation is not paid directly or indirectly by the Provider.

Life Settlement Provider: 

  • Specializes in purchasing life insurance policies in the life settlement market.
  • Providers normally raise capital from institutional investors.
  • Working directly with a provider may eliminate intermediaries and expedite the transaction.  
Sales Process

Understanding the process of selling your unwanted life insurance policy

Each individual scenario could be different based on the parameters of the transaction. 

Life Settlement Process Explained       Life Settlement Application Signed

Step 1 | Discovery:

Policy owner realizes that his/her life insurance policy is an asset that can be sold. 

Step 2 | Representation:

If a life settlement is determined to be the best option, the policy owner or the advisor contacts a member of the Life Insurance Settlement Association who is either a life settlement broker or provider to begin the process. It's possible to engage in a life settlement through both. 

Step 3 | Application:

After choosing proper representation to settle a policy, the policy owner must fill out an application and provide policy, ownership and insured information including a list of physicians and/or medical records for underwriting. It is crucial that you discuss all your privacy and security rights.

Step 4 | Underwriting:

The settlement company submits the medical records for review by an independent life expectancy company. Life expectancy companies calculate the probable life expectancy using actuarial and physician experts.

Step 5 | Analysis:

Each life settlement provider/buyer calculates the market value for the policy presented for sale. Companies may consider different factors when valuing a policy, including contract specifics such as premium expense, death benefit and carrier ratings, as well as insured information such as age and life expectancy underwriting.

Step 6 | Offer:

The provider/buyer will either decline or extend an offer to the policy owner or broker. A broker will seek competing offers from other providers/buyers. The policy owner can accept or decline any offer.

Step 7 | Purchase and Sale Agreement:

If the policy owner accepts an offer, the provider that made the offer will prepare a purchase and sale agreement and other documents formalizing the transaction. The policy owner, insured and beneficiaries then sign this package. The provider will review, complete due diligence and countersign the package. The funds for the settlement transaction are then placed in an escrow account.

Step 8 | Notification:

The insurance carrier is notified of the change of policy ownership and beneficiary to the new owner, the provider.

Step 9 | Funds Transfer:

Upon written verification of the change of ownership and beneficiary, the escrow agent releases the settlement payment to the seller of the policy.


Consumer Resources

Articles, Videos and Whitepapers 

Learn More

Find Help Now 

Select a firm that best meet your needs

Find a LISA Member
LISA Professional

What's New For Consumers

The Latest News

View More

The life settlement industry is undergoing a period of steady growth, fueled by demographic tailwinds and increased consumer awareness of the life settlement option as an alternative to lapse or surrender of a life insurance policy. But leading your business through a season of rapid growth can be just as challenging as navigating through adverse market conditions.

Heather Christie, an award-winning executive and leadership coach, challenged attendees at LISA’s 25th Annual Life Settlement Conference — held last month in Nashville, Tenn. — to provide the crucial leadership their organizations need in order to thrive in the years ahead. Christie’s keynote address, “Leading through Massive Growth,” shared key strategies to deal with negativity, disengagement or resistance in the workplace.

“Two out of every three workers in your companies are either not engaged or are actively disengaged,” said Christie. “This means they are doing ‘just enough’ to keep their jobs but would leave any day for another opportunity. What do you think it would look like if you could break through that negativity and find a way to pivot the mindsets of those employees, so they were working for the success of the company?”

Christie shared a new model for business leadership to help LISA members get their employees to take a much higher level of personal responsibility, which will hopefully lead to higher levels of engagement and achievement. She has branded this model “On The Court”.

The people in your organization who are “on the court” have made a conscious decision to take personal responsibility for everything under their control, explained Christie. Those who are “off the court” have disengaged from the success of the business and are likely to be sources of negativity, blame, complaints, excuses, resistance and perhaps even collusion with other employees to undermine the growth of the company.

“One of the top leadership responsibilities that you have is to help people get back on the court,” said Christie. “Not to judge them for their poor attitudes and not to blast them for their negativity in the workplace, but to help them understand they have an option to take ownership of their emotions and encourage them to get back on the court. The court is where all of the action is and where most of them want to be, they just need an influential leader to show them the way.”

Christie drew upon a wide range of professional experience to illustrate to conference attendees how they can best determine if their managers and other employees are on the court or off the court.

“The key is to recognize the individual’s state of emotions and whether they are positive or negative contributors to the business,” she explained. “The only thing you can control is how you respond to things that happen to you. You can’t control whether a prospective customer chooses to work with your company or a competitor, but you can control how you respond to that choice. You can’t control a customer’s anger over a problem that occurred, but you can control how you respond to that anger.”

The day following her keynote address, Christie translated these management principles into a practical workshop for life settlement industry participants. She led attendees through a series of exercises in order to determine one specific business strategy they wanted to implement within their organizations during the fourth quarter of 2019 (“Win The Quarter”).

Then she shared six tips for how to implement that strategy with a practical action plan:

  1. Carve out the time in your calendar to block out calls and emails, sit down at your desk and write out a plan for implementing your strategy.
  2. Create a 90-day action plan — not any shorter and not any longer — to take the strategy from idea to reality.
  3. Begin executing the action plan right away.
  4. Review your progress on a weekly basis and identify gaps in your progress that need to be addressed to stay on track toward your end goal.
  5. Don’t get distracted by the day-to-day noise and calendar demands that can derail your weekly progress reviews.
  6. Once you complete implementation of the strategy, set a new 90-day plan and continue the positive momentum.

“It is so tempting to set these sorts of management initiatives aside when we are in the trenches of business development and operations, so this will require you to pivot your mindset and reset your priorities,” said Christie. “But the truth is, it’s not enough to just work harder anymore, executives in the life settlement industry are going to have to think long-term about how they want to move their businesses forward in the next several years. The companies that are able to get more of their employees on the court, pulling in the same direction, will be best-positioned to succeed during a time of massive growth and opportunity.”

Additional Management Sessions

LISA’s Fall Conference featured two additional sessions that provided attendees with practical insights into day-to-day management challenges:

  • “Calling All One-Person Marketing Departments” was a practical information session that shared tactical ideas for growing a life settlement business through smart digital marketing. Attendees learned about the importance of “inbound marketing” strategies that connect with prospective customers where they are. An immediate action step was to review your company’s blogging and content development plans to make sure that you are creating original content of interest to prospective customers or referral sources, then sharing that content as much as possible on your website and social media platforms.
  • “Creating an HR Strategy to Scale” was a presentation that identified five key people challenges life settlement industry participants must manage to succeed as their businesses grow in the coming years: (1) Attracting top talent; (2) Leading an inexperienced management team; (3) Navigating employee performance issues; (4) Managing employee leave requests; and (5) Leveraging data-based decision making in the Human Resources function.


All news

New Blog Posts

View More
  • retirement shortfall
  • Happy Couple
  • Downsizing
    August 20, 2018

    4 Ways to Downsize in Retirement

    The fact is that downsizing isn’t a concept limited to the size of your house or the amount of possessions sitting in boxes. Downsizing can be a strategy applied to far more than selling a large family home and moving into a smaller place for the next chapter of life, it can be a smart retirement strategy when used in other aspects of life as well.

    Read More
  • DIY Life Settlements
    July 13, 2018

    How to Embrace the New Era of “DIY” Retirement Funding

    With traditional pensions disappearing, individual retirement savings accounts are increasingly crucial. Unfortunately, a 2017 report from the U.S. Government Accountability Office found that “many households are ill-equipped for this task and have little or no retirement savings.” Another study found recently that retirement savings “are dangerously low” and placed the median retirement account balance for near-retirement households at just $12,000.

    Read More