Sell Your Life Insurance Policy in Indiana | Life Settlement Guide

You bought a life policy years ago. It made sense at the time. Now the picture may look different. Premiums creep up, kids are grown, mortgages are paid off, medical bills start to increase, or you simply prefer cash payout (generally a lump sum payment today rather than a benefit your loved ones may never need.

In Indiana, there is a regulated way to sell a life insurance policy while you are still alive. In statute it is called a viatical settlement. In practice, the same rules cover what the rest of the market calls life settlements for seniors and for people with serious health issues.

This guide walks through how Indiana treats these transactions, what protections you have, and what realistic numbers look like.

Is It Legal To Sell My Life Insurance Policy In Indiana

Yes. Indiana regulates these transactions under its viatical settlement chapter in the Insurance Code. The law requires any company that buys policies from Indiana residents as a business to hold a viatical settlement provider license, and it defines when brokers and agents need to be licensed as well.

Key points from the statute and Department of Insurance guidance:

• •A viatical settlement provider is the company that actually buys your policy under a settlement contract.
• •A viatical settlement broker is the party that represents you, shops your policy, and negotiates with providers for a fee. The broker owes you a fiduciary duty and must act in your best interest.
• •Both the provider and, in most cases, the broker need the right Indiana insurance licenses.

Indiana also has a specific rule banning stranger originated life insurance arrangements. These are schemes where investors back the purchase of a new policy from day one with an understanding that it will be sold soon after issue. For a normal policyowner who bought a policy for family, business, or estate planning reasons and now wants to sell, that is not the problem. The target is pre-planned investor deals pretending to be regular insurance.

Who Actually Buys Indiana Policies

From your side, the transaction runs through a licensed viatical settlement provider. You sign your settlement contract with that provider, not with a hedge fund in New York.

Behind the scenes, providers are usually backed by:

• Dedicated life settlement funds
• Pension and endowment money
• Family offices and private credit funds

Indiana treats all of that capital as sitting behind the provider. Your protections are tied to that licensed provider and, if you use one, your broker.

The provider must:

• •Use contract forms approved under Indiana rules
• •Make specific written disclosures before you sign
• •Fund an escrow account correctly and on time
• •Honor the state rescission rules

The broker, when there is one, is legally on your side and must disclose how and how much they are getting paid.

Safety Concerns And The Hitman Question

Every once in a while someone asks the blunt question. If I sell my policy to a fund that gets paid when I die, does that put a target on my back?

It is a natural worry, but it does not line up with how this market actually works. For a deeper look at why this concern is unfounded, see our article on the "hitman" question.

Real buyers are regulated institutions. Think pension funds, asset managers, specialist life settlement funds, and family offices that live under compliance, audits and regulators. They buy large pools of policies, not one or two bets on a single person. Your policy is a tiny piece of a diversified portfolio. No one is sitting in a room watching your file and waiting for news.

More importantly, crime would completely destroy the investment. If someone were foolish enough to try something like that, the claim would be frozen, law enforcement would be involved, and the policy would become radioactive. The buyer would lose their capital, their license and their business, and the people involved would be looking at serious prison time. That is the exact opposite of what professional investors want.

There are plenty of real risks in life. Selling a policy through a regulated life settlement process does not meaningfully change your exposure to violent crime. The buyer wants a clean, boring actuarial outcome, not drama. If this were a real world problem you would see patterns of cases and headlines over the last few decades. You do not, because serious firms do not play games with that line.

If this worry is on your mind, it is better to treat it as something to acknowledge and then put aside, not as a deciding factor in whether to explore a settlement.

Retained Death Benefit And What Happens If The Buyer Stops Paying

In some transactions you do not sell the entire policy. Instead, you take part in cash today and keep a slice of the future death benefit. That structure is usually called a retained death benefit. The buyer agrees to carry the full premium load and, when the insured passes away, your family gets the retained portion without ever having to write another check.

The obvious follow up question is what happens if the fund or buyer stops paying premiums in ten years. If the policy lapses, your retained benefit disappears with it. That is a real risk, and it belongs in the contract, not swept under the rug.

Well structured deals handle this with clear protections. Common approaches include giving you the right to step in and assume the policy if premiums are not paid on time, or if the fund winds down or fails. In practice that can mean a clause that says if premiums are not funded by a certain date, ownership can revert or you can elect to take over and keep the policy in force by paying premiums yourself. Serious buyers also use professional servicing companies and advance notice requirements so you, your adviser, or your lawyer get notified long before coverage is at risk.

The point is that you do not have to simply hope the fund behaves. You can ask, in plain language, what happens if premiums are not paid, when you are notified, and what your rights are to step back in. If you are doing any kind of retained death benefit, those answers should be written into the settlement documents before you sign, so your family is not relying on a handshake twenty years from now.

How Much Is My Policy Worth In Indiana

Pricing is not set by law. It is a market outcome. Offers sit on top of actuarial math, competition for policies, and how efficient the premium structure is.

Typical ingredients:

• •Age of the insured
• •Medical history and realistic life expectancy
• •Type of policy (permanent life insurance can price differently than term life insurance) and face amount
• •Required insurance premiums to keep the policy in force
• •Life insurance company strength and administrative record

Broadly, for older insureds with meaningful health impairments and reasonably efficient premium loads, offers can land anywhere from ten to sixty percent of the death benefit. That range is wide on purpose. A healthy seventy year old with a thin universal life policy is a very different asset than an eighty three year old with cardiac and pulmonary issues and a rich whole life contract.

Illustrative Indiana Style Scenarios

These are sample patterns based on current secondary market behavior, not quotes for any specific case.

Illustrative examples; may not reflect the value of your life insurance policy.

Example One

• Face amount: $1,800,000 universal life
• Insured: 79-year-old female with terminal illness including congestive heart failure that is stable under medication, life expectancy around eight years
• Cash Surrender value: $24,000
• Settlement offer: ~$420,000

Buyer is paying roughly 23% of the face and taking on all future premium payments.

Example Two

• Face amount: $900,000 second-to-die universal life insuring a married couple, ages 83 and 80, one spouse with cardiac history, the other relatively healthy
• Surrender value: $0
• Settlement offer: ~$180,000

Here the offer is about 20% of the face value.

Example Three

• Face amount: $500,000 convertible term
• Insured: 72-year-old male, history of treated prostate cancer, now monitored with stable labs
• Surrender value: $0
• Settlement offer: ~$95,000

This is just under 19% of the face amount once the policy is converted to permanent coverage.

Every real case will look different. The point is that as health declines and remaining premium cost gets shorter and lighter, the cash number on the table can become very meaningful relative to surrender and lapse.

When Can I Sell My Policy In Indiana

Indiana does not write a simple sentence in the statute that says you must hold a policy for a fixed number of years before you can sell it. What it does have is:

• A general insurance rule that individual life policies become incontestable after two years in force, except for fraud.
• A ban on stranger originated life insurance structures that are built to be sold to investors right after issue.
• A rule that if the same producer who sold you the policy participates in a viatical settlement on that policy within two years, they cannot collect a second commission from the settlement side.

In practice, this means:

• •Most buyers only want policies that are beyond the normal contestability window.
• •Any deal that looks pre-arranged from policy inception will be radioactive.
• •Short seasoning is sometimes possible in edge cases, but the bar is high.

If your policy is more than two years old, has real premium pressure, and your health has changed since issue, you are closer to the center of the Indiana secondary market.

Key Consumer Protections In Indiana

Indiana dropped the old wild west model a long time ago. The current framework is built around a few central ideas.

Licensing and Fiduciary Duties

• Providers and most people who negotiate settlements must be properly licensed, including producers who choose to act as settlement brokers.
• A settlement broker represents only you and owes you a fiduciary duty. That means they must follow your instructions and act in your best interest, regardless of who ultimately pays their fee.

Disclosures and Contract Terms

Indiana law spells out what the contract has to tell you in plain language. Among the required items are:

• How and when you get paid
• How much the broker and any producer are getting, directly or indirectly
• The fact that you may have other options such as policy loans, accelerated benefits, or changes in coverage
• A warning that certain rights under the policy may vanish once you sell, such as conversion options, waiver of premium riders, or additional family riders

Rescission Rights

Your contract must give you an unconditional right to cancel, and Indiana tells providers what that looks like. Under the statute and Department training materials:

• You can rescind for the longer of:
  • Thirty days after you sign the settlement contract, or
  • Fifteen days after you receive the money

If you rescind, you return the proceeds and the provider returns the policy and any premiums they advanced.

Escrow and Payment Timing

Indiana requires that settlement proceeds move through an escrow or trust account at a regulated financial institution. After you have signed and delivered the required documents:

• The provider must fund the escrow account promptly as set out in the statute
• Once the insurer confirms the change of ownership and beneficiary, the escrow agent must release the money to you within a very tight time frame set in the law

You should never be wiring a six figure policy for nothing but a promise. The money has to be at a disinterested bank before the carrier finishes processing the transfer.

Privacy and Health Status Checks

Indiana also borrows from the national model on privacy:

• Providers and brokers must protect your medical and personal data and may only use it as needed to complete the transaction.
• After the sale, they can only contact you or your designee at limited intervals to confirm that the insured is alive, and they cannot harass your family for status updates.

How The Process Works In Indiana

1. Screening- You or your advisor give basic information on the policy, the insured, premiums, and any major health changes. A provider or broker will quickly tell you whether it is worth a full review.
2. Documents and Authorizations- If it makes sense to continue, you sign releases so the provider or broker can order medical records and carrier illustrations. This stage is usually the slowest part of the process because it depends on doctors and carriers.
3. Underwriting and Pricing- The provider orders one or more independent life expectancy reports and runs detailed projections on premiums and projected cash flows. They combine that with the appetite of their capital partners to decide what they can offer.
4. Offers and Negotiation- You receive a written offer that lays out gross settlement amount, deductions for any broker or producer compensation, your net proceeds, and any retained death benefit if that structure is on the table. If you use a broker, this is when they earn their keep by pushing multiple providers to sharpen their pencils.
5. Contract, Escrow, and Closing- When you accept, you sign a settlement contract and carrier forms for ownership and beneficiary change. The provider funds escrow. After the carrier confirms the changes, the escrow agent wires your proceeds.
6. Rescission Window- Even after you are paid, you still have your statutory rescission period. If you change your mind within that window, you can unwind the deal by returning the money so long as you follow the contract instructions.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal, financial, or professional advice. Life settlement regulations vary by state, and this content should not be relied upon as a substitute for consultation with a licensed professional. Please consult with a qualified attorney, financial advisor, or licensed life settlement broker before making any decisions regarding the sale of a life insurance policy.