What is a Life Settlement?

What is a Life Settlement?

When a person no longer needs their life insurance policy, they may be eligible to sell it to a third party for more than surrendering it to the insurance carrier.  This sale is called a life settlement.   

In a life settlement transaction, the policy's owner transfers the policy to the buyer in exchange for an immediate cash payment.  At this point the buyer becomes the named owner of record with the insurance company that issued the life insurance policy, pays all future premium payments and then receives the benefit upon the death of the insured person.