Life Settlement Glossary
Every key term in the life settlement industry — clearly defined. From cash surrender value to viatical settlement, this is the reference guide for advisors, policyowners, and families.
Frequently Asked Questions
What is a life settlement?
A life settlement is the sale of an existing life insurance policy by the policyowner to a third-party institutional investor for a lump sum cash payment greater than the cash surrender value but less than the face value. The buyer takes over premium payments and collects the death benefit when the insured passes away.
What is the difference between a life settlement and a viatical settlement?
A life settlement applies to any policyowner who no longer needs their policy, typically age 65+. A viatical settlement specifically applies to terminally or chronically ill policyowners with a life expectancy of 24 months or less. Viatical proceeds may be tax-exempt; life settlement proceeds are taxed differently.
What is a life settlement broker?
A licensed intermediary who represents the policyowner and markets the policy to multiple institutional buyers to maximize the payout through competitive bidding. Brokers are fiduciaries to the policyowner, unlike providers (direct buyers) who represent their own investment interests.
What does 'face value' mean in life insurance?
Face value (also called face amount or death benefit) is the dollar amount the insurance company will pay upon the death of the insured. Life settlement offers are typically expressed as a percentage of face value — for example, a 20% offer on a $1M policy equals $200,000.
What is a rescission period in a life settlement?
A state-mandated cooling-off period after a life settlement contract is signed, during which the policyowner can cancel the transaction without penalty. Most states require 15–30 days. This is an important consumer protection right that every policyowner should be aware of before signing.
Talk to a Licensed Life Settlement Broker
Accelerated Life Solutions has been helping advisors and policyowners navigate the life settlement process since 1994. No upfront fees. Full confidentiality.