Life Settlements: An Advisor's Tool
Reveal the full market potential of your clients' life insurance policies with Accelerated Life Solutions — a leading, fully licensed life settlement broker partnering with financial advisors nationwide.
What Are Life Settlements?
What Is a Life Settlement?
A life settlement is the sale of an existing life insurance policy by a policyowner — typically age 65 or older — to a third-party investor for a lump sum greater than the cash surrender value, but less than the death benefit. The investor becomes the new owner, pays future premiums, and collects the death benefit.
What Is a Viatical Settlement?
Viatical settlements are designed for policyowners diagnosed with a terminal or chronic illness, typically with a life expectancy of less than two years. These settlements can provide much-needed liquidity for medical or living expenses. Tax treatment and eligibility often differ significantly from traditional life settlements — sometimes resulting in a tax-free payout.
How Did Life Settlements Originate?
The origins of life settlements trace to Grigsby v. Russell (1911), a landmark U.S. Supreme Court decision establishing that life insurance policies are personal property that can be sold or transferred. In the late 1980s, viatical settlements emerged. Today, life settlements are a mainstream financial planning solution governed by strict state regulations and professional standards.
How Does a Life Settlement Compare to Surrender or Lapse?
Understanding your three primary options when a life insurance policy is no longer needed.
| Factor | Life Settlement | Cash Surrender | Lapse |
|---|---|---|---|
| Payout | 20%–50% of death benefit | Cash value only (often 3%–8%) | $0 |
| vs. Surrender Value | 4–7x higher on average | Baseline | No value received |
| Future premiums | Eliminated (buyer pays) | Eliminated | Eliminated |
| Timeline | 30–90 days typical | 1–4 weeks | Immediate (grace period ends) |
| Tax treatment | Basis + ordinary income + capital gains | Basis + ordinary income | No proceeds, no tax |
| Best for | Maximizing proceeds from an unwanted policy | Quick, low-effort exit | No other option / oversight |
Actual payouts depend on insured age, health, policy type, and market conditions. Consult a licensed professional for personalized guidance.
Does Your Client Qualify for a Life Settlement?
- Age 65 or older (sometimes younger with impaired health)
- Policy face amount of $250,000 or more
- Universal life, whole life, and term or convertible policies
- Policy contestability period complete (at least 2 years in most states)
Why Do Policyowners Consider Life Settlements?
- Premiums are no longer affordable or justified
- Policy is no longer needed (children grown, estate taxes changed)
- Desire for improved liquidity or additional retirement income
- Business-owned policies after ownership changes
"I never realized my life insurance policy could provide real financial options. Accelerated Life Solutions guided me every step of the way, always acting with professionalism and integrity."
Frequently Asked Questions
Is a life settlement legal and regulated?
Yes. Life settlements are regulated in most states, with strong consumer protections and licensing requirements. Accelerated Life Solutions is licensed and compliant in every state we operate in.
How do I know if my client qualifies?
Most eligible clients are age 70+ with a policy face value of $250,000 or higher. Impaired health, universal/whole life, and some term policies may qualify. Contact us for a confidential policy review.
Will my client's information remain private?
Absolutely. All data is handled in accordance with HIPAA and state privacy laws. No information is shared without express written consent.
How is my compensation structured as an advisor?
Advisor compensation is always fully disclosed and paid only upon successful settlement. Our transparent process protects your role and ensures all regulatory guidelines are met.
What's the difference between a life settlement and a viatical settlement?
Viatical settlements are for those diagnosed with a terminal illness; life settlements are typically for seniors without a qualifying illness. Viatical settlements can have different tax benefits and qualification rules.