How to use this life settlement calculator
Our free life settlement calculator provides an instant policy valuation estimate showing what your life insurance policy could be worth on the secondary life insurance market. Unlike cash surrender value quotes from your insurance company, a life settlement or viatical settlement can pay 4-7 times more when you sell your life insurance policy.
Whether you're exploring senior life settlement options, considering selling your whole life insurance, or wondering how much your life insurance policy is worth, this calculator gives you a quick preliminary estimate. Our life insurance policy buyout calculator considers multiple factors that life settlement companies and institutional policy buyers use to determine offers.
Here's how to use our life settlement value calculator to estimate your potential life insurance cash payout:
- 1Enter your death benefit (face value). This is the total life insurance face amount your beneficiaries would receive. Policies with face values of $100,000 or more typically qualify for life settlement transactions. Higher death benefit amounts generally attract more life insurance buyers.
- 2Enter your monthly premium. Your life insurance premium cost affects your settlement offer. Lower premiums relative to face value result in higher offers from life settlement providers and life insurance investors.
- 3Select your policy type. Universal life insurance, whole life insurance policies, and variable universal life typically command the highest life settlement payouts. Convertible term life insurance may qualify if converted to permanent life coverage.
- 4Enter your current age. Age is critical for life insurance policy valuation. Seniors 65 and older typically receive the best life settlement offers, though chronically ill policyholders as young as 50 may qualify for viatical settlements.
- 5Select your health status and conditions. Unlike life insurance underwriting, medical conditions increase settlement value. Be honest about conditions like diabetes, cancer, heart disease, COPD, Alzheimer's, or Parkinson's disease. Your life expectancy assessment directly impacts your offer.
- 6View your instant estimate. Your estimated life settlement value appears instantly. Compare it to your policy's cash surrender value to see how much more you could receive by selling your life insurance for cash.
What is a life settlement?
A life settlement (also called a senior settlement or life insurance settlement) is a legal financial transaction where a policyholder sells their life insurance policy for cash to a third-party institutional life insurance buyer. The buyer becomes the new policy owner, assumes all future premium payments, and receives the death benefit when the original policyholder passes away.
Life settlements provide an alternative to surrendering your policy to the insurance company or simply letting your life insurance lapse. According to the Life Insurance Settlement Association (LISA), over $200 billion in life insurance face value lapses each year—representing billions in value that policyholders could have received through the life settlement market.
The average life settlement payout is 4-7 times the cash surrender value offered by insurance companies. For a policy with a $500,000 face value and $50,000 CSV (cash surrender value), a life settlement offer might pay $100,000-$200,000 or more—a significant difference that can fund retirement income, pay for long-term care, medical expenses, or eliminate financial stress for seniors.
Unlike viatical settlements, which are specifically for terminally ill policyholders, life settlements are available to seniors age 65 and older regardless of health status. Both viaticals and life settlements fall under the broader category of life insurance secondary market transactions.
"A life settlement can transform an unwanted expense into a financial windfall. Many policyholders don't realize their life insurance policy is a valuable asset that can be sold for significantly more than the surrender value. We've helped thousands of seniors unlock millions in hidden value from their unwanted life insurance policies."Tanson Bothe, Founder of Settle
The life settlement industry is regulated at the state level, with 43 states having specific life settlement legislation governing these transactions. Licensed life settlement providers, life settlement brokers, and policy buyers undergo rigorous vetting, and sellers receive consumer protections including:
- ✓Full disclosure requirements ensuring you understand all life settlement fees, broker commissions, and terms
- ✓Rescission periods (typically 15-30 days) allowing you to cancel the life settlement transaction
- ✓State-licensed life settlement brokers and buyers who must meet regulatory requirements
- ✓Escrow account protection ensuring your settlement funds are secure during the transaction
Life settlement vs. cash surrender value: What's the difference?
Many policyholders aren't aware they have options beyond surrendering their life insurance policy to the insurance company. When you cash out life insurance through surrender, you only receive the accumulated cash value minus fees. But when you sell your life insurance policy through a life settlement transaction, multiple life insurance investors compete for your policy.
Here's how life settlements compare to policy surrender and lapsing your policy:
| Factor | Cash Surrender Value | Life Settlement Offer |
|---|---|---|
| Typical Payout | 1-5% of death benefit | 10-25% of face value (4-7x more) |
| Who Sets the Price | Insurance carrier (fixed CSV) | Competitive bidding by life settlement buyers |
| Negotiation | No negotiation possible | Multiple institutional investors compete |
| Timeline | 1-2 weeks | 4-8 weeks (for best life settlement offers) |
| Health Impact | Health doesn't affect CSV | Medical conditions increase settlement value |
| Policy Types | Whole life, universal life only | Whole, universal, variable, convertible term |
Real Example: $500,000 Universal Life Insurance Policy
A 75-year-old senior with a $500,000 universal life policy might receive only $45,000 cash surrender value from their insurance company. Through a life settlement broker, that same policy could fetch $150,000-$200,000 from life settlement companies—a difference of over $100,000. That's money that could pay for in-home care, clear medical debt, supplement Social Security, or provide retirement income.
Don't Let Your Policy Lapse
If you're considering lapsing your life insurance or stopping premium payments, explore a life settlement first. When you let a policy lapse, you receive nothing. Even a low life settlement offer is better than walking away with zero. Contact a licensed life settlement broker before making any decisions about your unwanted life insurance policy.
Who qualifies for a life settlement?
Not everyone qualifies for a life settlement. Life settlement eligibility depends on several factors that life insurance buyers consider when evaluating policies. Understanding life settlement requirements helps you determine if selling your life insurance policy is a viable option.
Here are the typical life settlement qualification criteria:
Eligibility Requirements
Age 65 or older
50+ for viatical settlements with serious health conditions
Policy face value $100,000+
Higher death benefits attract more buyers
Eligible policy types
Universal life, whole life, variable life, or convertible term life
Past contestability period
Usually 2 years from policy issue date
Rated insurance carrier
A.M. Best rating preferred
Factors That Increase Value
Higher death benefit amounts
$250,000+ policies receive more interest
Lower premium-to-benefit ratio
Affordable policies are more attractive
Health conditions
Cancer, heart disease, diabetes, COPD, dementia
Advanced age
75+, 80+, 85+ receive higher offers
A-rated insurance carriers
MetLife, Prudential, John Hancock, etc.
Medical conditions that may qualify for viatical settlements include: terminal cancer, ALS (Lou Gehrig's disease), advanced Alzheimer's, Parkinson's disease, end-stage renal disease, congestive heart failure, advanced COPD, stroke, and HIV/AIDS.
Even if you don't meet all these criteria, it's worth getting a free life settlement estimate. Each case is evaluated individually by life settlement underwriters, and some policies may still qualify based on unique circumstances. A licensed life settlement broker can help determine your policy's market value.
How to maximize your life settlement value
Getting the highest life settlement offer for your life insurance policy requires strategy. Here are proven ways to maximize your life settlement payout and get the best price for your life insurance:
Work with a licensed life settlement broker representing multiple buyers
Different institutional life insurance investors have varying appetites for risk and may value your policy differently. A life settlement broker who works with 15+ licensed life settlement companies can create competitive bidding and drive up your offer. Never accept the first life settlement offer without shopping your policy to multiple life insurance buyers.
Provide complete and accurate medical records
Life settlement underwriters use your medical history to calculate life expectancy and assess policy value. Incomplete medical records lead to conservative (lower) offers because buyers must assume the worst. Complete documentation from your primary care physician, specialists, and hospitalization records results in more accurate—and often higher—policy valuations.
Consider converting term life to permanent coverage
If you have a convertible term life insurance policy, converting to universal life or whole life insurance before selling can significantly increase your settlement value. Permanent life insurance policies are more attractive to life settlement investors because premium payments are predictable and guaranteed.
Time your life settlement sale strategically
Life settlement market conditions, interest rates, and your health status all affect policy valuations. If your health has recently changed or you've been diagnosed with a new medical condition, get a fresh life settlement estimate—your policy may be worth more than you think. Changes in health can significantly impact life expectancy calculations.
Don't wait until life insurance premiums become unaffordable
Many policyholders wait until they can barely afford insurance premium payments before exploring life settlements. By then, missed premium payments, policy loans, or reduced death benefits may have reduced the policy's value. Start exploring life settlement options early while your policy is in good standing and before policy lapse.
Understand the difference between gross and net offers
Life settlement offers may be quoted as gross offers (before broker commissions and fees) or net offers (what you actually receive). Ask your life settlement broker to clarify all life settlement costs, including broker fees, underwriting fees, and closing costs so you can compare offers accurately.
The life settlement process: What to expect when selling your policy
Understanding how life settlements work and the life settlement process timeline helps you make informed decisions about selling your life insurance policy. Here's a typical life settlement transaction from start to finish:
Free Life Settlement Estimate (Day 1)
Use our free life settlement calculator to get an instant preliminary policy valuation. This helps you understand if your life insurance policy qualifies and what range of life settlement offers to expect. No obligation, no cost, and completely confidential.
Life Settlement Application & Documentation (Week 1-2)
Submit your policy documents including your life insurance contract, policy illustration, and sign HIPAA authorization for medical records release. Your life settlement broker gathers all necessary documentation to present your case to life settlement companies.
Life Expectancy Underwriting (Week 2-4)
Independent life expectancy providers (like AVS, Fasano, or 21st Services) review your medical records to calculate actuarial life expectancy. This LE assessment is critical to determining your policy's market value and what life settlement buyers will offer.
Competitive Bidding by Life Settlement Buyers (Week 4-6)
Your life insurance policy is shopped to multiple licensed institutional life settlement buyers and life settlement funds who submit competitive bids. Your broker negotiates with life insurance investors to get you the highest possible life settlement offer.
Life Settlement Offer Review (Week 6-7)
You receive and review all life settlement offers with no obligation to accept. Your life settlement broker explains each offer's terms, including net proceeds, fees, and closing timeline, helping you compare life settlement companies.
Life Settlement Closing & Cash Payment (Week 7-8)
If you accept an offer, life settlement closing documents are prepared including policy ownership transfer and beneficiary change forms. Your settlement funds are held in escrow until the policy transfer is complete. Most sellers receive their lump-sum cash payment within 2-4 weeks of acceptance.
Life settlement tax implications: What you need to know
Understanding the tax treatment of life settlement proceeds is important for financial planning and retirement planning. Life settlement taxation follows specific IRS rules that differ from policy surrender taxes or death benefit taxation. Here's what you need to know about taxes on selling life insurance:
How Life Settlement Proceeds Are Taxed (IRS Rules)
Life settlement proceeds are typically taxed in three tiers based on IRS Revenue Ruling 2009-13:
- 1.Tax-free return of cost basis: The portion up to your total premiums paid (adjusted cost basis) is generally tax-free—this is considered a return of your investment.
- 2.Ordinary income taxation: Life settlement proceeds above your cost basis but up to the cash surrender value are taxed as ordinary income at your marginal tax rate.
- 3.Capital gains taxation: Any amount above the cash surrender value is taxed as long-term capital gains—typically at lower rates (0%, 15%, or 20% depending on income).
Life Settlement Tax Example
For a $500,000 universal life policy with $100,000 in premiums paid, $50,000 cash surrender value, and a $200,000 life settlement payout:
- • First $100,000 → Tax-free (return of premium cost basis)
- • $0 → Ordinary income (CSV $50,000 is below premiums paid)
- • $100,000 → Long-term capital gains (settlement proceeds minus cost basis)
Viatical Settlement Tax Benefits
Viatical settlement proceeds may be completely tax-free under IRC Section 101(g) if the policyholder is terminally ill (life expectancy of 24 months or less) or chronically ill. This significant tax advantage makes viatical settlements particularly valuable for terminally ill policyholders needing funds for medical care or end-of-life expenses.
Important: Life settlement tax situations vary by individual and state. We recommend consulting with a qualified tax advisor, CPA, or estate planning attorney before completing a life settlement transaction. This information is for educational purposes only and does not constitute tax advice or financial advice.
Ready to get your free life settlement estimate?
If you're a senior with a life insurance policy you no longer need, can't afford, or want to sell for cash, you may be sitting on a valuable financial asset. Whether you're looking to fund retirement, pay for long-term care, medical expenses, or simply want to stop paying expensive premiums, here's how to take the next step toward a life settlement:
Get a free instant life settlement estimate
Use our life settlement calculator above to see your policy's potential value in under 60 seconds. There's no cost, no obligation, and your information is kept completely confidential. Compare your estimate to your cash surrender value to see the difference.
Speak with a licensed life settlement specialist
Our team of licensed life settlement brokers can answer your questions, explain the life settlement process, and help you understand your options. We work with 15+ licensed institutional life settlement buyers to ensure you get competitive offers for your life insurance policy.
Submit a formal life settlement application
If your life settlement estimate looks promising, complete a formal application. We'll gather your policy documents, policy illustration, and medical records to get accurate, binding life settlement offers from multiple institutional buyers.
Review life settlement offers and decide
We'll present you with multiple life settlement offers from competing life insurance buyers. You're never obligated to accept—the decision is entirely yours. Compare net proceeds, closing timelines, and terms to choose the best offer.
Questions about life settlements or viatical settlements?
Our team of licensed life settlement specialists is available to answer your questions about selling your life insurance policy, life settlement eligibility, viatical settlements, policy valuation, and guide you through the life settlement process. There's no pressure and no obligation.
LifeSettlementEstimate.com is operated by Settle, a licensed life settlement broker. We're committed to helping seniors unlock the hidden value in their unwanted life insurance policies through the life settlement secondary market.
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