Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Wednesday, October 14, 2020

Healthy Life Insurance Policyowners Can Qualify for Life Settlements

ElderLife settlements are the sale of an unwanted or unaffordable life insurance policy for substantially more than the policy's cash surrender value. These settlements typically benefit seniors by "providing them with resources to help pay for health care costs, medical bills and other needs in retirement." 

Traditionally, for a policy to have value in a life settlement, the insured person would need to be in their mid-to-late 70s and have declined in health since the policy was first issued. Diabetes, heart disease, cancer, and other serious medical conditions were typically needed for the policy to be sold. 

However, now healthy seniors have an option to sell their policies in order to generate income. This income can then be used to invest in retirement plans or pay for healthcare and other future expenses. 

There are three criteria that a healthy senior need to meet in order to qualify for a life settlement:

  1. The policy must be a guaranteed universal life (GUL) policy.
  2. The insured typically must be age 75 or older.
  3. The policy’s death benefit must be at least $250,000.

If a policy owner meets these criteria and they can receive an offer without presented a medical record review or underwriting. 

This provides many benefits. For one, if policy premiums have become too expensive, seniors can receive a life settlement in order to stop paying these premiums. Also, the recent changes in estate tax laws have provided more investment opportunities that seniors can use a life settlement to take advantage of. This would give seniors more control and freedom with their assets. 

See Ted Kilkuskie, Healthy Life Insurance Policyowners Can Qualify for Life Settlements, Think Advisor, October 2, 2020. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.


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