A retired couple who has learned about life settlements.

What is a life settlement?

A life settlement is the sale of a life insurance policy for its market value. Most people simply lapse or surrender their policies and receive little or nothing in return.  In a life settlement transaction, the policyholder sells the insurance to a third party and, in turn, receives a lump sum cash payment that is typically four or more times greater than its cash surrender value, according to the National Association of Insurance Commissioners.


At Lighthouse Life, we advocate for seniors like you to realize the market value of their insurance policies that are no longer needed or no longer affordable so they can better meet retirement, healthcare, and long-term care needs.


Whether you are looking for more information about life settlements, or are ready to sell your life insurance policy, we have educational resources to help you.


Don’t see what you need? Call us and one of our experienced team members will be happy to help you.



Glossary of life settlement terms

If you are considering a life settlement, you may come across a few terms you aren’t familiar with. Here are some definitions that might help you along the way.

Beneficiary: The person who is designated to receive a life insurance policy’s death benefit upon the insured’s death.

Cash surrender value: Also known as cash value, this is the amount the policyowner receives if they surrender the life insurance policy to the insurance company before a death benefit is paid.

Convertible term life insurance: A type of term life insurance that can be converted to permanent life insurance within a specified time frame.

Death benefit: The amount of money the policy’s beneficiaries receive from the policy upon the insured’s death.

Face value: This is another name for death benefit, the amount of money the policy’s beneficiaries receive from the policy upon the insured’s death.

Illustration: Projections about the future premiums that must be paid on a life insurance policy over the insured’s lifetime, or for a term life policy, during the policy’s term. Illustrations are provided by the insurance company.

In-force: A policy is considered in-force when the premium has been paid and it is in good standing.

Lapse: A policy is considered lapsed when premium payments are missed for a period of time, including after notices have been sent to the policyowner and the period to make back payments has passed. When a policy lapses, it no longer will pay a death benefit to beneficiaries.

Term life insurance: A type of temporary life insurance that provides coverage for a pre-defined period of time (the policy term). The premiums may remain level or increase annually.

Universal life insurance: A type of permanent life insurance that includes a savings component that accrues cash value. While universal life policies generally have lower projected premiums than whole life policies, the annual cost of insurance (COI) is not fixed and goes up over time.

Whole life insurance: A type of permanent life insurance that includes a savings component that accrues cash value. Premiums for whole life policies are fixed and guaranteed. Once issued, a whole life policy is guaranteed to remain in-force for the insured’s entire life (provided premium payments are made on time), or until the policy matures.

Frequently asked questions (FAQs) about life settlements

Here are answers to some of the most commonly asked questions about life settlements.


(Keep in mind, your financial advisor can fill you in on the details that apply to your unique financial planning needs).


Why would I want to sell my life insurance policy?

People buy life insurance policies for many good reasons. They terminate their policies for many good reasons as well, including:

  • The policy is no longer needed
  • The insured’s health has changed
  • Premiums are too costly
  • Cash surrender value has been depleted
  • Policyowner or a family member needs money now
  • Policyowner or a loved one needs money for long-term care

If your life insurance policy no longer serves it intended purpose, or if it is too expensive to maintain, you may want to pursue a life settlement and convert the policy to cash.

What can I use money from a life settlement for?

Anything you want – it is your money. Many people use the proceeds from a life settlement to pay for long-term care costs, general healthcare costs, and retirement expenses.


Because the money is yours, you may opt to do whatever you want with the lump sum you receive from a life settlement.

Will I pay taxes on my life settlement?

While many life settlements do not result in taxable income, there may be some tax liability (you should always check with a tax advisor). Additionally, there is legislation pending in the US Congress (HR 5958, the Senior Health Planning Account Act) that would make the proceeds of life settlements tax-free when applied towards certain types healthcare costs.


As part of our commitment to advocating for seniors, we support this legislation.

What will the life settlement process look like for me?

The life settlement process you’ll experience with Lighthouse Life is simple and fast.


Some companies take six months or more to complete a life settlement and get you the money you are owed. We believe that is too long to make you wait for what is rightfully yours.


With Lighthouse Life, life settlements are routinely completed in as little as 45 days.


Here is more information on how to sell your life insurance policy.

Is a life settlement safe for me?

Yes. Life settlements are considered among the most safe and secure financial service transactions in the US today, especially for seniors. Life settlements offer more consumer protections and transparency than any other insurance or financial service transaction.


Today, 43 states regulate life settlements, covering over 90% of the US population. Since 2015, only two consumer complaints have been reported to insurance regulators throughout the United States, according to the National Association of Insurance Commissioners.

A map showing the 43 states in which life settlements are regulated


Lighthouse Life has been the subject of 0 complaints and is a member of the Better Business Bureau.

Do I qualify for a life settlement?

You may, and it only takes a few minutes to find out.


While many factors contribute to whether you qualify, here are some basic life settlement eligibility guidelines:


Age: You generally need to be 65 or older to sell your life insurance policy.


Health: Most people who qualify for a life settlement have had a change in their health since their policy was originally issued. Healthy people can qualify depending on their age, policy type, and policy amount.


Policy amount: You must have a policy with a face value of $100,000 or more.


To see if you qualify, you can call us or complete this short form.




How Life Settlements Can Help

Many seniors struggle to keep up with rising retirement and healthcare costs. In fact, many seniors fear running out of money in retirement more than death.


Here are some ways life settlements can help seniors:


Contribute to paying for healthcare costs

According to Fidelity, a 65-year old couple retiring in 2019 could expect to spend $285,000 in healthcare and medical expenses throughout retirement.

A life settlement can help cover healthcare and medical expenses without requiring you to use existing retirement funds, or sell other property, like your home.


Strengthen retirement savings

28% of Americans in their 60s have less than $50,000 saved for retirement. With such a small nest egg, many seniors only partially retire, or defer retirement altogether until they feel more financially stable.

A life settlement can take an insurance policy that is costing you money and turn it into a large cash payout you can use to pay for anything you want, including retirement-related expenses.


Defray long-term care expenses

According to AARP, 7.9 million people ages 65 and up required long-term care in 2018. Because of the high cost of these services, seniors often forego necessary care, which negatively impacts their quality of life.

Life settlements can help defray the costs of long-term. By dedicating some or all of the proceeds from a life settlement to pay for long-term care costs, you can ensure you’ve set aside funds for these expenses.


How Lighthouse Life protects you

At Lighthouse Life, we go above and beyond regulatory requirements for disclosures and transparency to ensure you feel you are being treated fairly and with respect.

Here are some ways you are protected by choosing Lighthouse Life:

  • We provide you with a fast, free, fair, and safe transaction.
  • We promise you low and transparent fees.
  • We advocate for seniors like you and treat them with respect.
  • We support policy changes that empower seniors.