The basics
What a life settlement is, and how it compares with your other options.
How is a life settlement different from surrendering or lapsing a policy?
Lapsing and surrendering a life insurance policy both end the coverage, but they often leave the policyholder with little or no financial return.
What is a life settlement?
A life settlement is the sale of an existing life insurance policy to a licensed buyer in exchange for an immediate cash payment. Instead of keeping the policy and continuing to pay premiums—or surrendering it back to the insurance company for a small amount—the policyholder transfers ownership to a buyer who takes over the policy.
What types of life insurance policies qualify for a settlement?
Many types of life insurance policies can qualify for a life settlement, although some policy structures are more attractive to buyers than others.
Who buys life insurance policies in a life settlement?
Life insurance policies in a life settlement are typically purchased by licensed institutional buyers, not individual consumers. These buyers include life settlement providers, investment funds, pension funds, and other financial institutions that specialize in managing long-term assets.
Why would someone sell their life insurance policy?
Seniors choose to sell their life insurance policies for a variety of practical and personal reasons. In many cases, the policy no longer fits their current financial needs or retirement plans.
