Consumer Tips
• Understand how the process works and when the
different phases will happen.
• Decide whether to sell your policy directly to a life
settlement provider or go through a life settlement
broker who will do the comparison shopping for
you.
• If you don’t use a life settlement broker, compari-
son shop on your own.
• You don’t have to accept any life settlement offer.
• Check all application forms for accuracy, especially
information about your medical history.
• You must be truthful in your answers to application
questions.
• Make sure the life settlement provider agrees to
put your settlement proceeds in escrow with an
independent party or financial institution to make
sure your funds are safe during the transfer.
• Find out if you have the right to change your mind
about the life settlement offer after you get the pro-
ceeds. In many states, you have the right to change
your mind for a certain period of time. If you have
that right, you’ll have to return the money you were
paid and premiums the buyer paid.
• Understand whether buyers may learn your iden-
tity when they buy your policy, and whether they
will know certain medical and personal infor-
mation about you, such as your address and life
expectancy.
Defining the Terms
A life settlement is the sale of a life insurance policy
to another person or company in return for a cash pay-
ment of less than the full amount of the death benefit.
A life settlement provider is the person or company
that becomes the new policy owner in return for a pay-
ment made to the seller. The life settlement provider
becomes the policy owner, must pay any premiums that
are due, and eventually collects the full amount of the
death benefit from the insurance company.
A life settlement broker is the person or company who
represents the seller of the policy and can comparison
shop for life settlement offers. The buyer pays the bro-
ker a commission if the sale is completed.
Additional Questions to Consider
• Do I still need life insurance protection?
• Will I qualify for a new life insurance policy in
the future?
• If I sell my policy, how will they decide how much
cash I get?
• If I sell my policy, will there be any costs I have
to pay?
• If I sell my policy, will the money be put into an
escrow account? If so, who will the escrow agent be?
Does state law require the agent
to be licensed?
• Is my policy an employer or other group policy? If
so, do I need their permission to sell it?
• If I sell my policy, who will be the legal owner?
• Is the viatical settlement provider I plan to sell to
allowed to do business in my state?
• After I sell my policy, can the buyer resell it?
Consumer Alert
• If you’re asked to invest in or buy a life settle-
ment, contact your state insurance department
to learn more about the issues and risks.
• If you don’t have a life-threatening illness and
you’re interested in selling your life insurance
policy, contact your state insurance depart-
ment for more information.
• If you’ve been contacted by someone who wants
you to buy a policy and then sell it immediately,
contact your state insurance department. This activ-
ity may be considered fraudulent and the parties
may be prosecuted by the appropriate authorities.
Check with Your State
Your state insurance department may regulate the pur-
chase of life settlements. Contact them for a copy of
those regulations.
This publication was issued in joint cooperation with the:
National Association of Insurance Commissioners
2301 McGee Street, Suite 800 | Kansas City, MO 64108
(816) 842-3600 | http://www.naic.org