Every year, thousands of Americans over age 65 let life insurance policies lapse, surrender them back to the carrier for a fraction of their value, or simply stop paying premiums on coverage they no longer need. What most of them don’t know is that their policy — the one they’ve paid into for decades — may be worth significantly more than the insurance company is willing to tell them.

That’s where a life settlement comes in. It’s one of the most underutilized financial tools available to retirees today, and at Legacy Wealth Services, it’s a conversation we believe every policyholder over 65 deserves to have.

What Is a Life Settlement?

A life settlement is the sale of an existing life insurance policy to a third-party buyer for a lump-sum cash payment that is greater than the policy’s cash surrender value but less than its full death benefit.

In plain terms: instead of surrendering your policy back to the insurance company for whatever cash value they offer (which is often very little), you sell it on the open market to an institutional investor who will continue paying the premiums and eventually collect the death benefit.

The result? You walk away with real money — often several times what the insurance company would have given you — while freeing yourself from future premium obligations.

Life settlements are legal, regulated transactions available in most U.S. states. They are governed by state insurance departments, and reputable providers like Ashar Group and Coventry Direct — both partners of Legacy Wealth Services — operate within strict regulatory frameworks designed to protect sellers.

Who Qualifies for a Life Settlement?

Not every policy or policyholder will qualify, but the criteria are more accessible than many people assume. You may be a strong candidate if:

You are age 65 or older. The life settlement market is primarily designed for seniors. The older the insured, the more valuable the policy tends to be to buyers.
Your policy has a face value of $100,000 or more. Most buyers in the marketplace look for policies with at least a $100,000 death benefit. Larger policies often attract more competitive bids.
Your health has changed since the policy was issued. A decline in health — whether a new diagnosis, a chronic condition, or simply the natural changes that come with age — can actually increase the value of your policy on the secondary market.
Your policy type is eligible. Universal life (UL), whole life, term life (with conversion privileges), variable life, and survivorship/second-to-die policies are all commonly eligible. Even term policies with no remaining cash value can qualify.
Your circumstances have changed. Perhaps the children are grown, the mortgage is paid off, a business partner has retired, or estate planning needs have shifted. If the original reason you bought the policy no longer applies, a life settlement may be the right move.

How the Life Settlement Process Works: 4 Steps

At Legacy Wealth Services, we work with Ashar Group and Coventry Direct to access a competitive bidding marketplace — meaning your policy is presented to multiple qualified buyers simultaneously, driving up your offer. Here’s how the process unfolds:

Step 1: Policy Evaluation

We start with a no-obligation review of your policy. We’ll look at the policy type, face value, premium schedule, cash surrender value, and your current health status. This gives us a clear picture of whether your policy is a strong candidate and what range of value you might expect. There is no cost and no commitment at this stage.

Step 2: Submission to the Marketplace

If your policy qualifies, we submit it — along with your medical records and policy documents — to the life settlement marketplace. Rather than negotiating with a single buyer, your policy is made available to a pool of licensed institutional investors who specialize in this asset class. Competition among buyers is the single biggest driver of your final offer.

Step 3: Competitive Bids Are Received

Within a few weeks, you’ll receive multiple offers from interested buyers. We present all bids clearly and transparently, explain the tradeoffs, and help you evaluate which offer best fits your goals. There is no pressure to accept any offer, and you are under no obligation until you sign a closing agreement.

Step 4: Closing and Payment

Once you accept an offer, the buyer handles the transfer of policy ownership and beneficiary designation. The process typically takes 60–90 days from submission to funded payment. You receive your lump-sum cash payment — no strings attached.

Real Client Results: What a Life Settlement Can Mean in Dollars

Numbers tell the story better than any description. Here are three real-world examples of how life settlements have delivered meaningful financial outcomes for clients like you:

Client	Policy Type	Face Value	Surrender Value	Settlement Amount	Multiple
Robert, age 78	Universal Life	$500,000	$0	$92,000	9.2x
Helen, age 72	Term Life	$250,000	$25,000	$78,000	3.1x
David & Susan	Second-to-Die	$1,200,000	$50,000	$285,000	5.7x

Robert’s story is a powerful one. His universal life policy had no remaining cash surrender value — the insurance company would have given him nothing. Through the competitive bidding marketplace, he walked away with $92,000 in cash. That’s not a rounding error; that’s a life-changing outcome from an asset he was about to abandon.

Helen’s term policy illustrates that even policies with modest surrender values can yield dramatically better results through a life settlement. Her $25,000 surrender offer became $78,000 — more than three times as much.

David and Susan’s survivorship policy is a classic estate planning scenario. Originally purchased to cover estate taxes, the policy became unnecessary after changes in their estate. Rather than surrendering it for $50,000, they received $285,000 — a difference of $235,000 that funded their retirement plans in ways they hadn’t imagined.

Life Settlement vs. Viatical Settlement: What’s the Difference?

You may have heard the term viatical settlement and wondered how it differs. The distinction is important:

	Life Settlement	Viatical Settlement
Who qualifies	Seniors age 65+, any health status	Policyholders with terminal illness (life expectancy ≤ 24 months)
Health requirement	Health changes increase value; terminal illness not required	Terminal or chronic illness required
Tax treatment	Partially taxable (see below)	Generally tax-free under federal law
Typical payout	10%–35% of face value	Up to 80%+ of face value

If you or a loved one is facing a terminal diagnosis and needs immediate access to funds for medical care, living expenses, or to simply enjoy the time remaining, a viatical settlement may provide a significantly larger, tax-free payout. Legacy Wealth Services can guide you through both options with compassion and clarity.

Common Questions About Life Settlements

Is the money I receive from a life settlement taxable?

Yes, in most cases — but the tax treatment is more favorable than many people expect, thanks to the Tax Cuts and Jobs Act of 2017. Here’s how it generally breaks down:

Tax-free: Proceeds up to the total amount of premiums you’ve paid (your tax basis) are not taxable.
Ordinary income: Proceeds above your tax basis, up to the policy’s cash surrender value, are taxed as ordinary income.
Capital gains: Any proceeds above the cash surrender value are taxed at the more favorable long-term capital gains rate.

Every situation is different. We strongly recommend consulting with your tax advisor before closing a life settlement transaction. We’re happy to provide documentation to support that conversation.

After the sale, who pays the premiums?

The buyer — the institutional investor who purchased your policy — assumes all future premium obligations. Once the sale closes, you have zero financial responsibility for the policy. You simply keep your cash.

What happens to my family’s death benefit?

This is the most important tradeoff to understand clearly: your beneficiaries will no longer receive a death benefit from this policy. The buyer becomes the new owner and sole beneficiary. If providing a death benefit to your heirs remains a priority, a life settlement may not be the right choice — or we may explore whether a replacement policy or another solution better fits your needs. Our role is always to help you make the decision that’s right for your family, not simply to close a transaction.

How long does the process take?

From initial evaluation to funded payment, most life settlements are completed in 60 to 90 days. Complex cases or larger policies may take slightly longer.

Is my privacy protected?

Yes. Life settlement transactions are confidential. Your medical and financial information is shared only with licensed, regulated buyers under strict confidentiality agreements.

Is a Life Settlement Right for You?

If you have a life insurance policy you no longer need, can no longer afford, or that has outlived its original purpose, you owe it to yourself to find out what it’s worth on the open market. The worst-case scenario is that you learn the surrender value is actually your best option. The best-case scenario? You discover an asset worth tens or hundreds of thousands of dollars that you were about to walk away from.

At Legacy Wealth Services, we bring the competitive bidding power of Ashar Group and Coventry Direct to every client conversation — ensuring you receive the highest possible offer, not just the first one.

Ready to find out what your policy is worth?

👉 Schedule a Free, No-Obligation Policy Review — A 20-minute conversation could reveal an asset you didn’t know you had.

👉 Learn More About Life Settlements at Legacy Wealth Services — Explore our full life settlement services, FAQs, and how we work on your behalf.

Legacy Wealth Services is licensed in 26 states and serves clients across the country. Life settlement availability and regulations vary by state. This article is for informational purposes only and does not constitute tax, legal, or financial advice. Please consult a qualified advisor regarding your individual circumstances. Rodney Cummings | OR License #18847712 | 503-832-8555 | rod@legacywealthservices.com