For policies you no longer need
Lapsing a policy you no longer want can mean walking away from real money.
Selling an unwanted or unaffordable life insurance policy on the secondary market — often for meaningfully more than its cash surrender value, when it qualifies.
In Drew’s Words
Life Settlement
Simply Explained
Circumstances change. A policy bought to protect young children, fund a buy-sell agreement, or cover an estate tax exposure that no longer exists can become an expense with no remaining purpose. Most people in that position surrender the policy for its cash value or simply stop paying and let it lapse.
A life settlement is the sale of that policy to a third-party institutional buyer, who takes over the premiums and receives the death benefit. When a policy qualifies, the sale price is typically well above the cash surrender value — sometimes several times it — and always below the face amount.
It does not fit every policy or every person, and it is not free of consequences: proceeds can be taxable, the buyer gains access to medical records and will periodically confirm status, and giving up coverage is permanent. Our role is to determine honestly whether it is the right answer and to run a competitive process if it is.
How It Works
Should you keep it?
The first question is whether the policy still serves a purpose. Frequently the right answer is to restructure or keep it, and we will say so.
Qualification review
Age, health, policy type, and face amount determine whether a policy is marketable at all — established before you invest time in a process.
Competitive bidding
Qualifying policies are taken to multiple licensed providers, because a single unsolicited offer is rarely the best one available.
Tax and plan coordination
Proceeds are evaluated for their tax treatment and folded into your income and estate plan rather than landing as an untethered lump sum.
Who this is for
- Insureds generally 65 or older holding a policy with a face amount of $100,000 or more
- Policy owners whose original need — children at home, a business obligation, an estate tax exposure — no longer exists
- Owners facing rising premiums on a policy they were about to surrender or let lapse
Who this isn’t for
- Anyone whose family still depends on the coverage, where keeping the policy is the better answer
- Younger, healthy insureds, whose policies rarely attract a competitive offer
- Anyone unwilling to share medical records with a prospective buyer
Questions
How much more than surrender value can I expect?
It varies widely and no honest answer is a single number. Pricing depends on the insured's age and health, the policy type, the cost of keeping it in force, and what buyers are paying at the time. Some policies attract several times their surrender value; others attract no offer at all. A qualification review establishes which category yours falls into before any process begins.
Are the proceeds taxable?
Generally in part. Broadly, proceeds up to your basis in the policy are treated as a return of premium, amounts above basis up to the cash surrender value are ordinary income, and the remainder is typically capital gain — with different treatment where the insured is terminally or chronically ill. The specifics depend on your situation and should be confirmed with your tax professional before you sell.
Who ends up owning the policy?
An institutional buyer, who becomes the owner and beneficiary and takes over premium payments. They will periodically verify whether the insured is still living, typically through a servicing company. If that arrangement is uncomfortable, that is a legitimate reason not to proceed and worth saying out loud early.
Related services
Planning rarely stops at one decision. These are the pieces that most often sit alongside life settlement.
- Estate & Trust Planning
Wills, trusts, and beneficiary designations coordinated with your actual financial plan — reviewed and implemented under one roof alongside our legal counsel, not left to gather dust.
- Premium Finance for Ultra-High-Net-Worth Families
Financing the premiums on substantial life insurance so committed capital stays committed — designed conservatively, stress-tested, and reviewed every year.