What is a Life Settlement?

A Life Settlement is the sale of an existing life insurance policy. Frequently the original planning needs which precipitated the purchase of the policy change. Cash flow may make premium payment a burden and the original owner may wish to let the policy lapse. With a Life Settlement the policy holder receives funds greater than the policy's cash surrender value. Today there are other options. Aside from surrendering the policy to the issuing company, the owner may sell his policy similar to how one sells property, stocks and bonds.

Not selling the policy back to the issuing carrier, but rather to a secondary market gives the policy owner a market that did not used to exist. This new alternative market allows the policy owner to obtain much better pricing for this valued asset.