A life settlement is when you sell your existing life insurance policy to a third party for cash. You receive more than the cash surrender value (typically 2-5x more) but less than the death benefit. The buyer takes over premium payments and receives the death benefit when you pass away.

Generally, you need to be age 65 or older with a policy worth at least $100,000. However, younger individuals with serious health conditions may also qualify. Term, whole life, universal life, and variable life policies can all potentially be sold.

Most people receive 2-5 times more than the cash surrender value, though the exact amount depends on your age, health, policy type, death benefit amount, and premium costs. Buyers will provide specific cash offers based on your situation.

Health issues can actually increase the value of your policy in a life settlement. The more significant your health concerns, the higher the offer may be, as it affects life expectancy calculations.

The portion of the settlement equal to what you've paid in premiums is typically tax-free. Any amount above that may be taxable. We recommend consulting with a tax advisor about your specific situation.

From initial application to receiving your check, the process typically takes 60-90 days. This includes policy evaluation, medical underwriting, offer negotiations, and closing. Some settlements close faster depending on the complexity.

Some buyers may offer partial settlements where you sell a portion of your death benefit while keeping the rest. This can provide cash while maintaining some coverage for your beneficiaries.

Your alternatives include surrendering the policy for cash value (typically much less), letting it lapse, keeping it and continuing to pay premiums, or reducing the death benefit to lower premiums. A life settlement often provides significantly more value than surrendering.