3 Things You Should Know About Life Settlements

Life insurance money from settlement

The National Association of Insurance Commissioners (NAIC) is in charge of regulating life insurance policy settlements. Therefore, according to the NAIC, these settlements are one of the safest and most secure financial transactions. Also, life settlements act as worthy alternatives for cash surrender.

What Is a Life Insurance Settlement?

Life insurance settlements, or life settlements, make efficient use of the life insurance policy you have protected, monitored, and nurtured over the course of the policy’s lifetime. Life insurance settlements base the obtained values of the policy on the status of the open market. The following factors are all accounted for when determining fair market value for your life settlement:

  • on-time premium payment
  • riders
  • the amount of the policy

Your life insurance policy is your property. It is a valuable asset that when utilized correctly can be very lucrative. Life insurance settlements are secure ways to obtain funds for a variety of events. 

What Are the Benefits?

Policyholders have the advantage of settling on their insurance policy rather than letting it lapse, terminate, or surrender. The type of policy (term or permanent) is irrelevant in regards to what types of policies can policyholders sell. However, different types of policies warrant different market values. Other factors in determining pricing include riders, timely payment, face amount, and the health of the named insured. After meeting these qualifications, the policyholder may now investigate the benefits of selling their insurance policy. 

Return On Investment (ROI)

Life insurance settlements are very lucrative because they pay out more than the policy’s cash surrender value as it pertains to permanent and universal life insurance policies. The payout of a life insurance policy settlement can be four times more on average than a policy’s cash surrender value. If you’ve nurtured and cared for your policy and have maintained good health equivalent to that of your attending physician’s statement, you may earn more than anticipated. The return on investment upon selling your life insurance policy speaks for itself. 

Life insurance settlements provide sufficient funds in the event of financial hardship. Long-term care expenses, medical expenses, funeral costs, tuition, and disability expenses are all worthy causes for policy settlement. If the face value of your policy exceeds $100,000, you may qualify for a hefty settlement that will make your financial burdens a thing of the past.


There are a few qualifications to consider when attempting to sell your insurance policy. These requirements are in place to protect insurers from those who seek to take advantage of life insurance policies:

  • You must be 70 years of age or older (there are some exceptions but they depending on various factors)
  • Your policy must not have lapsed
  • You must have maintained sufficient health
  • Your policy must be over $100,000.00
  • Your policy must not have been surrendered

Safe and Secure

The NAIC and the insurer are in charge of closely monitoring all transactions regarding life insurance settlement. Personal information and data are kept encrypted and stored safely in insurance databases where only vetted and licensed agents may have access. All consumer reports are closely monitored and the policyholder/named insured has the right to view/order these reports. In short, you can rest assured that your personal information and investments are safe and secure with your insurer and that the NAIC is monitoring the process.

Life insurance settlements are an expeditious, secure, and streamlined way to reap the benefits of the asset that is your insurance policy. Begus Insurance Group is proud to have services extending to 11 states and our agents are always available for quotes and consultations.