Your Clients Are Lapsing Policies Worth 3–5x Surrender Value.
Life settlements are a regulated, secondary-market transaction that can unlock significant value for clients with policies they no longer need. We handle the process. You earn the commission. Your client keeps more money.
The Opportunity
The Revenue Line Hiding in Your Book of Business
Every year, billions of dollars in life insurance face value lapses or surrenders for pennies on the dollar. Policyholders over 70 with universal or whole life policies they no longer need are sitting on an asset most advisors never discuss.
A life settlement converts that liability into liquidity for your client and commission revenue for you. The table below shows what real transactions look like.
Commissions shown are illustrative based on industry-standard broker compensation. Actual commissions vary by transaction.
Male, 78, cardiovascular
Face Value
$750,000
Surrender
$18,000
Settlement
$52,500
Client Net Gain
+$34,500
Your Commission
$3,675
Female, 82, diabetes
Face Value
$500,000
Surrender
$8,500
Settlement
$35,000
Client Net Gain
+$26,500
Your Commission
$2,450
Male, 74, cancer history
Face Value
$1,200,000
Surrender
$45,000
Settlement
$84,000
Client Net Gain
+$39,000
Your Commission
$5,880
Your Process
How It Works for Advisors
Identify Eligible Clients
Review your book for clients 70+ with UL/WL policies they’re considering lapsing or surrendering.
Introduce the Concept
We provide talking points, compliance-reviewed materials, and case studies you can share with clients.
We Handle Everything
Our team manages underwriting, buyer competition, paperwork, and clearinghouse processing.
Client Gets Paid, You Earn Commission
Standard broker compensation is 6–8% of the settlement amount. Paid from transaction proceeds.
Built-in client protections
Your client is never obligated to accept any offer.
You can stop the process at any time.
Client information is never shared without explicit written consent.
Straight Talk
Why Advisors Hesitate (And Why They Shouldn’t)
We hear these concerns regularly. Here are direct answers.
I don’t know enough about life settlements
We provide full training and handle all underwriting, paperwork, and buyer management. You introduce the concept; we execute.
Is this a fiduciary risk?
Failing to inform clients about life settlements may actually create more liability than presenting the option. Multiple state regulations now require or encourage disclosure.
My client’s insurance company won’t like it
The policyholder’s right to sell is legally protected. Carriers cannot block a settlement.
The process seems complicated
Average transaction takes 60–90 days. We manage every step. Your involvement is the initial conversation and the client introduction.
How do I get paid?
Commission is paid from the transaction proceeds — your client pays nothing for your involvement. Standard broker compensation is 6–8% of the settlement amount.
Industry Context
A Regulated, Established Market
Regulatory Foundation
The Supreme Court established the right to sell life insurance in Grigsby v. Russell (1911). Today, life settlements are regulated in 43+ states under state insurance department oversight.
All providers and brokers must be licensed. Consumer protections include mandatory disclosures, rescission periods, and independent escrow requirements.
Market Scale
In 2020, the industry processed over 3,200 policies with a total face value exceeding $4.6 billion. Institutional investors, pension funds, and regulated financial entities are the primary buyers.
The Life Insurance Settlement Association (LISA) represents the industry and advocates for consumer protections and regulatory standards.
Fiduciary Safe Harbor
Multiple states have adopted or are considering life settlement disclosure requirements. The NAIC Life Settlements Model Act provides a regulatory framework that many states follow. For fiduciaries, presenting the option may reduce liability compared to allowing a client to lapse or surrender without exploring alternatives.
Advisor Protection
We provide compliance-reviewed materials, E&O-friendly documentation, and a transparent process designed to protect your practice. Every client interaction is documented. Every offer is made in writing. Every transaction uses independent escrow.
Common Questions
Frequently Asked Questions
No. Life settlements are regulated in 43+ states under state insurance department oversight. The right to sell a life insurance policy was established by the U.S. Supreme Court in Grigsby v. Russell (1911). All providers must be licensed, and transactions are subject to consumer protection laws including mandatory disclosures, rescission periods, and independent escrow requirements.
Licensed life settlement providers and institutional investors including pension funds, asset managers, and regulated financial entities. Buyers are vetted, licensed where required, and subject to state regulatory oversight. This is a well-established asset class in the institutional investment market.
Carriers cannot legally prevent a policyholder from selling their policy. The right to sell or assign a life insurance policy is a fundamental property right upheld by over a century of case law. While some carriers may attempt to slow the process, they cannot block a legitimate settlement transaction.
Value depends on the insured’s age, health status, policy type, face value, and premium structure. As a general benchmark, life settlement offers average 3–5x the cash surrender value. Universal life and whole life policies with face values of $100K+ from clients aged 70+ are the most common candidates.
For a formal offer, yes. Medical records are required to generate a life expectancy estimate, which is the primary driver of settlement pricing. Records are shared only with licensed entities involved in the transaction, require explicit written consent from the client, and are handled in compliance with HIPAA and state privacy laws.
Life settlement proceeds may be taxable. The 2017 Tax Cuts and Jobs Act (TCJA) improved the tax treatment for life settlement sellers by changing how cost basis is calculated. Generally, proceeds up to the cost basis are tax-free, amounts between the cost basis and cash surrender value are taxed as ordinary income, and amounts above the cash surrender value are taxed as long-term capital gains. We always recommend clients consult a tax professional.
Sometimes, if the policy is convertible to a permanent policy. Universal life and whole life policies are the most commonly settled. Variable universal life also qualifies. Pure term policies without a conversion option generally do not qualify because they have no permanent value to a buyer.
See How Life Settlements Work for Your Practice
Tell us about a client scenario. We’ll provide a preliminary assessment and schedule a confidential walkthrough.