ILIT Premium Burden Eliminated With $340K Settlement
An irrevocable life insurance trust weighed down by unsustainable premiums was converted to $340,000 in cash — relieving family tension and delivering unexpected liquidity to the beneficiaries.
The Situation
An irrevocable life insurance trust (ILIT) established in Tampa, Florida held a $2.5 million whole life policy on a 76-year-old grantor. The trust had been designed 20 years earlier to provide estate liquidity for the next generation — but the $44,000 annual premium had become a growing source of conflict among the adult beneficiaries.
Two of the three beneficiaries wanted to continue funding the trust. The third could no longer contribute and wanted out. The trustee reached out to Accelerated LS after the family attorney mentioned that ILIT policies can qualify for life settlements.
The NAIC's consumer guide on life settlements specifically notes that trust-held policies qualify for settlement — a fact many trustees and beneficiaries are unaware of. The trust document and state law were reviewed, and the trustee proceeded with the sale.
"This was tearing the family apart. The life settlement gave everyone what they needed — cash in hand, and no more premium obligations."
— ILIT trustee, Tampa FL
How It Happened
Trustee Consultation
The ILIT trustee contacted Accelerated LS after a family attorney confirmed the policy was eligible for settlement. We reviewed the trust document, state laws, and policy terms to confirm eligibility.
Legal & Policy Review
We coordinated with the trust attorney to ensure all required consents and trustee authorizations were in order before approaching the secondary market.
Market Submission
The policy was submitted to 13 institutional buyers. The favorable insured profile and large face value drove strong competition.
Proceeds Distributed to Trust
$340,000 was funded to the ILIT and distributed to beneficiaries per the trust terms. The $44,000/year premium obligation was permanently eliminated.
Key Outcomes
Could You Qualify?
Irrevocable life insurance trusts are frequently overlooked as life settlement candidates — but trust-held policies are eligible in most states with proper trustee authorization. If your ILIT has become a financial burden or the underlying estate planning need has changed, a life settlement may be the ideal exit strategy.
- You are 65 or older
- Premiums have become difficult to afford
- Your coverage needs have changed
- The policy is at risk of lapsing
- You need funds for healthcare or retirement income
According to the NAIC's consumer guide on life settlements, trust-held policies are eligible for life settlements in most states, subject to trust document review and trustee authorization.
Learn more about life settlement eligibility requirements or use our free policy value calculator to get an instant estimate.