Life Settlement

A life settlement is the sale of an existing life insurance policy to a third-party investor for a lump-sum cash payment that exceeds the policy's cash surrender value but is less than the death benefit. The investor assumes responsibility for premium payments and receives the death benefit when the insured dies. Life settlements are typically available to policyholders aged 65 or older with a policy face amount of at least $100,000. They allow policyholders who no longer need or can afford coverage to monetize an asset that would otherwise be surrendered for less. The settlement amount depends on life expectancy, policy type, and current market conditions.