While the life settlement process is not necessarily simple, it is straightforward – there are steps that all life settlements have and which sellers of their life insurance policies will go through. Here they are, from beginning to end. You can use this page as a general overview or checklist when going through the process of a life settlement. Good luck!

1. Make the Decision(s)

The first step is to decide whether a life settlement is appropriate for you. Compare it to the alternatives, figure out whether it’s worth it. This should include talking to a competent and qualified financial advisor who can help you crunch the numbers and provide guidance. If you decide to go through with it, you should decide whether to use the services of a broker or make contact with licensed providers directly.

2. Gather Information

When you’ve engaged with a broker or provider, they will gather information about your life insurance policy and state of your health – this entails providing your insurance and medical records. But before you provide them with these documents, make sure to find out their policy on data sharing and the commission (in the case of brokers) that they take. In fact, if they don’t disclose it upfront, you should consider that a red flag. Information gathering should be a two-way street. Once the information has been gathered, life expectancy underwriters will provide a life expectancy report for the life settlement provider(s).

3. Analysis and Offers

These providers will then come to a decision on the value of the life insurance policy and whether it is worth buying. If the decision is positive, they will make an offer.

4. Offer Evaluation

The broker or life settlement provider will provide you with this offer and explain it. There may be several offers, and each will have an explanation laying out why they think it is worth the amount offered. You should discuss these offers with your financial advisor. If you find one of them acceptable, you should communicate this to your broker or the life settlement provider. If not, you can try making a counter-offer and negotiating with them. Remember that life settlement providers are looking to get the best deals possible for themselves, so if you have reason to believe your life insurance policy is an attractive purchase, you can try raising the price.

5. The Closing Package

If you accept an offer, the life settlement provider will send what is known as a “closing package” – it will contain the documents necessary to confirm the acceptance of the offer and begin the transfer of the life insurance policy to the new owner. Your broker or the provider will provide you with an explanation of the forms. Once you have completed these, you return them to the provider.

6. Funds in Escrow and Transfer of Ownership

Once the closing package has been returned, the life settlement provider will prepare and submit an official request to the life insurance company for the transfer of ownership of the policy to them. The funds for the payment, meanwhile, are transferred to an escrow agent who holds them until the policy has been legally transferred to the new owner.

7. Finalization of ownership and payout of the life settlement

When the transfer of ownership has been fully processed and finalized by the life insurance company, they will send a confirmation to both parties – to the previous owner of the policy and to the new one, after which it should be forwarded to the escrow agent, who will then release the funds. That is when you, the seller of the life insurance policy, will receive your payment – the life settlement – and can use it as you see fit. Congratulations! And, if you’re not here yet – good luck!