Taxes and money
Taxes, fees, payment and the benefits you may rely on.
Is the money from a life settlement taxable?
Often, part of it. What you paid in premiums usually comes back tax-free. The amount above that is generally taxed, in two different ways.
How will selling my policy affect Medicaid eligibility or other benefits?
Selling a life insurance policy through a life settlement may affect eligibility for Medicaid or certain other needs-based government benefits. Medicaid is a means-tested program, meaning eligibility is determined partly by a person’s income and financial assets.
How do I get paid, and how fast?
Funds are generally held in escrow while the policy transfer is completed, then released according to your contract. A completed sale typically takes 60–90 days from application to payment.
Can a sale affect Medicaid or other benefits?
Yes. Sale proceeds can affect needs-based benefits such as Medicaid or SSI. Check with a benefits specialist before accepting an offer.
Are there any fees?
Your Settle appraisal is free, and there is no obligation to sell. Settle is paid by provider partners if a sale closes, not by you.
What is my cost basis?
Your cost basis generally starts with the premiums you paid, but adjustments may apply. Your insurer and a tax professional can help establish the correct figure.
Should I talk to a tax professional first?
Yes, especially before accepting an offer. A tax professional can explain how the proposed proceeds fit your tax situation.
Can I use the money for anything?
Generally, the proceeds are yours to use once the sale is complete. Any ownership, trust or benefits restrictions still need to be considered.
