Important: This article is for educational purposes only and does not constitute legal, tax, or financial advice. Consult your professional advisors regarding your specific situation.
Before You Start: What Buyers Actually Need
Life settlement buyers do not price a policy based on a headline or a rough estimate. Their underwriting teams evaluate: the insured's age and health profile, the policy type and carrier, premium structure, and projected longevity. The more complete and current the file, the easier it is for buyers to underwrite quickly.
Quick checklist (minimum file):
- Policy details (carrier, type, face amount, issue date)
- Premium schedule and current premium mode (monthly/annual)
- In-force illustration (current assumptions, premiums, values)
- Ownership/beneficiary structure (individual/trust/business)
- Medical authorization forms (as applicable for underwriting)
- Any loan information (if the policy has an outstanding loan)
The 5 Mistakes
Accepting the First Offer
Why It Hurts
Without competition, there is no pricing pressure. Buyers can bid conservatively, especially when documentation is light or timelines are unclear.
What to Do Instead
Ensure the case is packaged correctly and marketed broadly to a vetted pool of buyers so pricing reflects competitive tension.
Skipping In-Force Illustrations (or Using an Outdated One)
Why It Hurts
Incomplete or outdated policy data reduces bidder confidence and can depress pricing or limit buyer participation.
What to Do Instead
Request a current in-force illustration from the carrier and include it in the initial package.
Ignoring Convertible Term Coverage
Why It Hurts
If the conversion window is missed — or misunderstood — options may narrow and value can be lost.
What to Do Instead
Confirm whether the policy is convertible, the conversion deadline, and what permanent products it can convert into.
Misunderstanding Taxes and Net Proceeds
Why It Hurts
Surprises late in the process can delay closing or lead to regret after the sale.
What to Do Instead
Treat tax impact as part of the decision framework from the beginning. Coordinate early with your CPA.
Going Direct to One Buyer
Why It Hurts
With only one buyer at the table, pricing and terms are dictated by that buyer's preferences and risk posture.
What to Do Instead
Work with an independent, broker-aligned process that markets the policy across a broader set of qualified buyers.
How to Improve Your Outcome (Practical Steps)
- Get the documents first: policy verification + a current in-force illustration.
- Clarify ownership: individual vs trust vs entity ownership can affect paperwork and timing.
- Understand the premium runway: know how long the policy can be kept in force while offers are being evaluated.
- Run a structured market: multiple buyers, consistent package, clear timeline.
- Evaluate more than price: consider closing speed, escrow process, and the buyer's reliability.
Next Steps
Estimate Your Policy’s Value
Use our calculator to estimate value, then review our process to understand documentation and timelines.