Life Settlement Questions, Answered

A life settlement is the sale of an existing life insurance policy to a third-party institutional buyer for a lump-sum cash payment. The buyer takes over the premium payments and eventually collects the death benefit. You receive more cash than your insurance company would offer as a surrender value, and according to the Life Insurance Settlement Association (LISA), typically several times more.

Yes. Life settlements are legal, state-regulated transactions. They are regulated in 43 states plus Puerto Rico, covering roughly 90% of the US population (state insurance codes and LISA), and have been recognized as a legitimate financial option by courts and regulators for decades. See the life settlement rules in your state.

Once the sale closes, ownership of the policy transfers to the buyer. The buyer becomes responsible for all future premiums and collects the death benefit when the insured passes away. Your beneficiaries will no longer receive the death benefit, which is an important thing to discuss with your family before proceeding.

The buyers are typically large institutional investors: pension funds, hedge funds, and specialized life settlement companies. They view life insurance policies as a financial asset with a predictable return. Because multiple institutional buyers compete for policies, that competition works in your favor and drives up the price you receive.

A viatical settlement is for a person with a terminal or chronic illness, typically with a life expectancy of 2 years or less, and the proceeds are often income-tax-free. A life settlement is for seniors who are not terminally ill, and it is usually taxed only in part. Both involve selling a policy to a third party, but the regulations, buyers, and pricing differ, and because taxes depend on your situation, it is worth checking with a tax professional. The brokers at Citizens Life Group are appointed viatical settlement brokers and can help with both. See the viatical settlement guide or read our full comparison.

When you surrender a policy to your insurance company, you receive the cash surrender value, typically a small fraction of the death benefit. In a life settlement, you sell the policy on the open secondary market where multiple buyers compete, which in 2025 paid sellers nearly 9 times more than the average cash surrender value (LISA). Your own result depends on your policy, age, and health.

Most seniors 65 or older who own a life insurance policy with a face value of $100,000 or more may qualify. The best candidates have seen a change in health since the policy was issued, no longer need the coverage, or are struggling to afford the premiums. Several of these thresholds have exceptions, so it is worth checking if you are close.

Most buyers look for policies with a death benefit (face value) of at least $100,000. Policies below that are generally harder to sell because transaction costs make them less economical for buyers. If you have several smaller policies, there may still be options worth exploring. An estimate will confirm where your policy stands.

Age 65 is the typical minimum, but there are exceptions. Applicants younger than 65 who have experienced a significant decline in health since the policy was issued may qualify, because buyers focus on life expectancy rather than age alone. If you are under 65 and dealing with a serious health condition, it is worth applying to find out.

Universal life and whole life policies are the most commonly sold in life settlements. Convertible term policies may also qualify, and even standard term can sometimes be sold after a significant health change. If you are not sure what type of policy you have, call us and we will help you figure it out.

Yes, in most cases. If the trust document gives the trustee authority to sell or transfer trust assets, the trustee can sell a trust-owned policy in a life settlement, and the proceeds go to the trust. Policies held in an irrevocable life insurance trust (ILIT) are commonly sold this way, and a sale is one of several ways families unwind an ILIT that has outlived its purpose. See our guide to selling a trust-owned life insurance policy for who signs and how it works.

It depends on the face value of the policy, the age and health of the insured, the policy type, and the ongoing premium costs. As a benchmark, LISA's 2025 market data shows the average life settlement paid nearly 9 times the cash surrender value, $212,066 versus a $24,360 average surrender. Your own offer will differ. Learn more about how your policy is valued, check your eligibility with the life settlement calculator, or get a free estimate.

Yes, significantly. A decline in health since the policy was issued can actually increase your policy's value in the secondary market. Buyers price offers based on the insured's life expectancy, so a policy held by someone with health changes may attract higher bids. This is why manageable health conditions are not a reason to assume a policy will not qualify.

The main tradeoff is that your beneficiaries no longer receive the death benefit once the sale is final. Proceeds may also be partly taxable, so talk with a tax professional. A large lump sum can affect need-based benefits like Medicaid or SSI, and any offer will be less than the face value of the policy. A life settlement makes the most sense when you no longer need or can no longer afford the coverage, not as a first resort. A good broker will tell you honestly if keeping your policy, or another option, serves you better.

Selling is one option, not the only one. Depending on your situation you might keep the policy and get help covering premiums, reduce the death benefit to lower the cost, tap the cash value of the policy through a loan or withdrawal, use an accelerated death benefit rider if you are seriously ill, or surrender the policy for its cash value. See all the ways to cash out a life insurance policy, read your options if you can no longer afford the premiums, or see how often policies lapse for nothing.

Sometimes, yes. Some buyers offer what is called a retained death benefit settlement, where instead of a cash lump sum you keep a portion of your coverage with no more premiums to pay, and your beneficiaries still receive that reduced death benefit. Not every buyer offers it and it depends on your policy, so ask us whether it is an option for your situation.

The only real test of price is competition. A single buyer, called a provider, has no reason to show you its highest number. A licensed broker shops your policy to a network of institutional buyers who bid against one another, and is required to bring you every offer, so you see what the market will actually pay instead of taking a single company at its word. See the full comparison of a life settlement broker vs. a provider.

From start to payment, the typical life settlement takes 60 to 90 days. That includes the application and review (1 to 3 days), underwriting and competitive marketing (4 to 8 weeks), and closing and fund transfer (2 to 4 weeks). See our full step-by-step process guide for details.

No medical exam is required for a life settlement. Your broker requests your medical records through a standard HIPAA authorization you sign as part of the application, and an independent life expectancy underwriter reviews them to assess your health. The process is entirely paperwork-based, with no doctor visits or physical exams.

You keep the policy in force during the sale, which usually takes 60 to 90 days, so you continue paying premiums as normal during that time. If affording premiums during the process is a concern, tell us early, because in some situations there are options to address it. Once the sale closes and ownership transfers, the buyer takes over all future premium payments.

You will typically need four things: your life insurance policy summary or in-force illustration, a recent premium statement, a standard HIPAA medical release authorization, and a photo ID. We guide you through exactly what to gather for your situation.

Once you accept an offer, the buyer prepares closing documents for the policy transfer. You sign the paperwork, usually with a notary, which we make easy. Your funds are held in escrow and released to you after the transfer is verified. You receive your payment by check or wire transfer.

Yes. Most states require a rescission period, typically 15 to 30 days, and in several states the clock starts only when you receive your payment, not when you sign. During that window you can cancel the sale, return the money, and get your policy back. We make sure you understand the rescission rights in your state before you sign anything.

Until the sale closes, the policy is still yours and remains in force, so your named beneficiaries receive the full death benefit exactly as they would have. The sale simply does not complete. Ownership and the death benefit pass to the buyer only after closing, once you have received your payment.

Yes. Citizens Life Group is a licensed life settlement brokerage, and our broker, Jeff Hallman, is a licensed life agent and an appointed viatical settlement broker, which covers senior life settlements. As your broker we represent you, the seller, as a fiduciary. Broker licensing is regulated state by state, so where we are not licensed we work with fiduciary-affiliated brokers licensed there. You can verify our licensing by name with your state insurance department.

Getting started takes about 3 minutes. Fill out our free estimate form with basic information about your policy: face value, policy type, and the age and general health of the insured. We review it and follow up within one business day to let you know whether your policy looks like a candidate. There is no cost and no commitment to move forward.

You pay nothing out of pocket, ever. There are no application fees, no upfront costs, and no fee if you apply and decide not to sell. The broker commission is paid from the settlement proceeds at closing, and every fee is disclosed in writing before you sign anything. Learn more about us.

A fiduciary is legally required to act in your best interest, not their own and not the buyer's. As your broker, Citizens Life Group represents you, the seller. Your broker shops your policy to multiple buyers, negotiates on your behalf, and presents you with every offer, never steering you toward a lower one for their own benefit. You can find this and other key terms in our life settlement glossary.

We work with sellers nationwide. In states where Citizens Life Group is licensed we represent you directly, and where we are not, we work with fiduciary-affiliated brokers licensed there, so a fiduciary always represents you, the seller. See the life settlement rules in your state, or contact us to confirm availability.

No. Citizens Life Group is not a buyer and does not buy policies. As your broker, we represent you, the seller, and work with a network of vetted institutional life settlement buyers on your behalf. That independence is what lets us run a competitive bidding process and pursue the highest offer for you. See the full comparison of a life settlement broker vs. a provider.

Citizens Life Group, along with any affiliated brokerage and the buyers we work with, is required to handle all medical and personal information in compliance with HIPAA and applicable state privacy laws. We use secure communications for all sensitive data, and your information is shared only with pre-qualified parties under strict confidentiality agreements.

Start by verifying the license. Look up the company or person by name with your state insurance department, and confirm whether they are a broker, who represents you, or a provider, who is the buyer. Expect every fee to be disclosed in writing before you sign, and be cautious of anyone who pressures you or guarantees a specific payout. A legitimate broker is glad to answer questions and give you time to decide.

Often only in part. In general, the money you get back up to what you paid in premiums (your cost basis) is not taxed, and amounts above that may be. The treatment can be complex and depends on your policy, so we strongly recommend consulting a qualified tax advisor or CPA before you sell. See our guide to life settlement taxes. Citizens Life Group does not provide tax or legal advice.

You are not legally required to disclose the sale to your beneficiaries. Still, because the death benefit will no longer go to them after the sale, it may be wise to discuss it with your family as part of your overall financial and estate planning.

It can. If you receive Medicaid or Supplemental Security Income (SSI), a large lump-sum payment could affect your eligibility, because both are means-tested programs with asset and income limits. We strongly recommend speaking with a benefits counselor or elder law attorney before completing a life settlement if you receive either benefit. Citizens Life Group does not provide legal or financial advice.

You are not required to have an attorney, though you may choose to involve one, especially if your estate plan is complex. As your broker, we guide you through the closing documents and make sure you understand everything before signing. Most clients complete the process without an attorney, but for large policies or complicated situations, having legal counsel review the documents can add peace of mind.

A life settlement generally does not affect other life insurance policies you own, or benefits that are not means-tested. However, if you receive Medicaid or SSI, a large lump-sum payment could affect your eligibility. We recommend consulting a financial advisor or benefits specialist if this applies to you.