Life Settlement may be a new term for you, but it has been a valuable tool for increasing your assets. These days cash is king, and selling a life policy is one way to generate cash, all you need to follow the Life Settlement Process


Individual or corporate-owned life policies are eligible to be sold.  An individual or corporation sells his/her life policy to an institutional third party for a single payment of cash.  The cash payment is usually greater than the cash surrender value offered by the insurance company.  The new buyer becomes the new owner of the policy and changes the beneficiary; when the insured person dies, the policy pays the death benefit to the policy owner’s beneficiary.

This is not a modern-day invention, as the first transaction dates back to 1911, when a life policy was sold to pay for a medical operation.  This particular transaction ended up in court; the court ruled in favor of the new owner, saying the policy owner has the right to sell his policy to a 3rd policy. 

Since the new owner has to maintain the policy (pay the premium cost), they are usually looking for larger life policies ($100,000+ and larger), insured people that are over age 65 or have deteriorating health conditions.


The life settlement buyers are composed of large, sophisticated institutional buyers, pension funds, hedge funds, etc.  Warren Buffet’s Berkshire Hathaway invests almost $600 million annually in life settlements. 

Is A Life Settlement Worth It?

This statement by the London School of Business verifies why people may be interested in selling their life insurance policy:

“A life settlement pays policyholders an average of 4 times more than the policy’s cash surrender value”.

1. Profitable: As mentioned above, an individual gets a much higher cash pay-out than what the insurance company offers.

2. Cash Needed Now:  Clients have needs and requirements that need cash now.  A life settlement that generates cash is one option that makes sense for many people.

The Stanford Centre for Longevity states that more than 71.5 million retirees/senior citizens are burdened with debt and expenses.

Life Settlement:  Not Worth It

Are Life Settlements suitable for everyone?  Absolutely not. Each client needs to look at short-term and long-term options before selling their asset.  

1. Settlement Value Is Always Less Than Death Benefit: The London School of Business stated how much an individual gets on a life settlement case but conveniently failed to mention the policy that the owner receives a higher return from the average death benefit received after the death of the insured person.

2.Nothing Left Behind: The purpose of Life Insurance is to give monetary security (though temporary) to the policy owner’s beneficiary.  If you sell your insurance to a 3rd party, the death benefit goes to the 3rd party and not your beneficiaries. 


Life Settlement is a viable alternative investment option for the buyers and a vehicle for cash for the sellers. It is beneficial for those senior citizens who need to pay for increased expenses or need money for alternate investments.  It is helpful for corporations that need cash to manage their balance sheet better.

Remember -it’s Your Insurance Decision

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