What is a life settlement?

A life settlement or senior life settlement is the transfer of a life insurance policy from the policyholder to a licensed Life or Senior Settlement funder. By definition, the market value is greater than the life insurance cash value but less than the net death benefit.

The transaction involves the policy owner's transfer of ownership rights to the Life Settlement funder, which then pays all premiumsóthe life insurance cash value, and ultimately receives the insurance benefits.

Most policies are lapsed because of costs or other financial strains. Few senior policy owners realize that their policy might bring 5% to 25% of the death benefit through life insurance settlements or senior life settlements. On average, Life Settlements are at least three times larger than policy cash surrender values.