Sorry, you need to enable JavaScript to visit this website.
Skip to main content

Life Settlements

From Lighthouse Life

What is a Life Settlement?

A life settlement is the sale of a policyowner’s life insurance policy for its market value. The policy must be in-force, which means active and has not lapsed. Policyowners may elect to terminate their policies for a variety of reasons:

  • The policy is no longer needed
  • Premiums have become too expensive
  • Cash surrender value has been depleted
  • Unanticipated liquidity need
  • Increased need to fund post-retirement income, long-term care, or other health needs

Instead of letting the policy lapse or surrendering it to the carrier, a life settlement enables the policyowner to sell their policy for its full market value. In addition to selling the entire policy, the policyowner may have the option to keep a portion of their policy for their beneficiaries, eliminate future premiums, or get immediate cash.


Why DPL Likes Life Settlements

Life settlements can help the financial lives of seniors by providing significantly greater resources in retirement from the sale of life policies than if they lapse or surrender their policy back to the insurance company. Instead of letting the policy lapse when it becomes unneeded or unaffordable, a policyowner can sell that policy through a life settlement.

A life settlement can generate up to four times or more value for policyowners than the policy’s cash surrender value. That’s found money for seniors to fund retirement investments, and to pay for costs of living, healthcare and long-term care.


How to Think About Life Settlements

When your client needs:

RETIREMENT INCOME: Clients needing additional assets for retirement can utilize a life settlement to sell their life insurance policy for its full market value.

TAX-FREE INCOME: In situations where the client is chronically or terminally ill, life settlement proceeds may be received tax-free. Life settlement proceeds for policyowners who are not chronically or terminally ill may be subject to taxation depending on a number of factors.

What are the qualifications for a life settlement?

  • The insured is age 70 or older (some people under 70 may qualify depending on other factors)
  • The life insurance policy is at least $100,000
  • The insured's health has typically changed since the policy was issued. Healthy insureds age 70 and above may also qualifiy depending on policy type

What's Next?

Learn more about how Life Settlements can make a difference for your clients. Contact your DPL consultant to learn more.

More Materials from Lighthouse Life

All information sourced directly from LighthouseLife.com.