Sell Your Life Insurance Policy in Kansas | 2026 Life Settlement Guide

You bought life insurance in a different chapter of your life. Mortgage, kids, a partner, a buy sell agreement, or an estate plan that made sense at the time. Years later, the story changes. Premiums feel heavy, coverage may be redundant, and the policy starts to look more like a stranded asset than protection.

Most Kansas policy owners have no idea they can sell a life insurance policy for cash instead of lapsing it or taking a small surrender value. Kansas regulates these transactions under its Viatical Settlements Act. The terminology is old, but the substance is modern. The law uses the word viatical, but the definition of viator is not limited to terminally ill insureds. It also covers seniors who simply no longer need or want their coverage. To understand how this process works nationally, see our comprehensive guide to life settlements.

In practice, this means a Kansas resident with a sizable policy can, in many cases, sell that policy to a regulated buyer for more than surrender value, while operating inside a fairly detailed consumer protection framework.

Is It Legal to Sell My Life Insurance Policy in Kansas?

Yes. Selling your life insurance policy through a regulated settlement is legal in Kansas.

Kansas regulates these transactions under its Viatical Settlements Act. The law defines viatical settlement contracts, requires licensing of viatical settlement providers and brokers, and sets rules on disclosures, rescission, escrow and advertising.

A few practical points:

• You are supposed to deal with licensed viatical settlement providers and viatical settlement brokers, not random investors.
• The Kansas Insurance Department enforces the act and publishes consumer material on selling your policy.
• The law treats these transactions as the sale of a life insurance policy for less than the full death benefit, but more than the cash value or accelerated benefit amount.

If you are a Kansas resident and you sell your policy, the transaction is generally governed by Kansas law, even if the provider is domiciled elsewhere.

How Long Do I Need to Own My Policy Before I Can Sell It?

Kansas has a clear two year waiting rule.

Kansas law does not allow a viatical settlement contract during the two year period that starts on the date the policy was issued, with some narrow exceptions.

The main exceptions include:

Conversion from Prior Coverage

If the policy you want to sell was issued on conversion from prior group or individual coverage, and the combined time under the old policy and the new policy is at least twenty four months, the two year bar can be satisfied across both contracts.

Certain Life Events and Health Changes Within Two Years

The law lets you sell earlier if you can show one of several events occurred after issue, such as:

• The viator or insured becomes terminally or chronically ill
• The viator's spouse dies or the viator divorces
• The viator retires from full time employment
• The viator becomes physically or mentally disabled and cannot continue full time work
• The viator is declared bankrupt or insolvent, or is in certain court supervised proceedings
• A family member beneficiary under the policy dies

In day to day practice, most clean Kansas cases that get shopped are on policies more than two years old, so there is no need to lean on an exception.

Who Actually Buys Policies in Kansas?

The capital is institutional, even if you never see it.

On the back end, buyers tend to be:

• Dedicated life settlement funds
• Institutional investors and financing entities that provide capital to licensed providers
• Structured vehicles that hold large pools of policies

On the front end, as a Kansas policy owner, you normally interact with:

• A viatical settlement broker who represents you and owes you a fiduciary duty under Kansas law, and
• One or more licensed viatical settlement providers who actually buy the policy and fund the escrow.

The investors stand behind the providers and related trusts. You do not sign a fund limited partnership agreement. You sign a viatical settlement contract with a licensed provider operating under Kansas rules.

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.

Wondering what your policy might be worth in Kansas?

How Much Is My Policy Worth in Kansas?

Kansas is one of the few states that sets minimum payout requirements for viatical settlements based on the insured's life expectancy. These minimums apply after deducting any outstanding loans against the policy.

Minimum Payout Requirements

For insureds with shorter life expectancies, Kansas requires the following minimum payments:

• 80% of the remaining death benefit if the insured has a life expectancy of less than 6 months
• 70% of the remaining death benefit if the insured has a life expectancy of at least 6 months but less than 12 months
• 65% of the remaining death benefit if the insured has a life expectancy of at least 12 months but less than 18 months
• 60% of the remaining death benefit if the insured has a life expectancy of 18 months but less than 25 months

If the insured has a life expectancy of 25 months or more, the viatical settlement provider must pay the greater of the cash surrender value or the accelerated death benefit of the policy, after deducting any outstanding loans.

These percentages may be reduced by five percent for policies written by an insurer rated less than the highest four categories by a rating agency.

What Drives Actual Pricing

Beyond the minimums, actual pricing comes from underwriting. The main drivers are the same as in other regulated states:

• Age of the insured
• Health and realistic life expectancy
• Policy type and carrier
• Current and projected premium pattern
• Face amount and any riders

National level consumer and regulatory guidance on life settlements shows the same broad pattern. For senior life settlements, offers often fall somewhere in a wide band, roughly ten to sixty percent of the death benefit for policies investors actually want, with shorter life expectancies and efficient premium loads at the higher end and younger, longer duration risks at the lower end.

Kansas sits inside that general range. To make it concrete, here are model deal patterns that fit the way regulated Kansas cases are often priced. These are illustrations, not promises or quotes.

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

Example One

• Policy: Two million dollar universal life policy
• Insured: Age seventy eight, male, congestive heart failure, expected survival a little under five years
• Surrender value: About thirty five thousand dollars
• Settlement offer: In the neighborhood of four hundred eighty thousand dollars

That would be roughly twenty four percent of face and around thirteen times the surrender value.

Example Two

• Policy: One million dollar universal life policy
• Insured: Age eighty two, female, history of breast cancer now stable, controlled hypertension, life expectancy roughly six years
• Surrender value: About twenty two thousand dollars
• Settlement offer: Around two hundred thirty thousand dollars

That would be about twenty three percent of face and more than ten times surrender value.

Example Three

• Policy: Five hundred thousand dollar convertible term policy
• Insured: Age seventy four, male, prior colon cancer now in remission, life expectancy seven to eight years
• Surrender value: No surrender value
• Settlement offer: Around eighty five thousand dollars

That would be about seventeen percent of face for a policy that would otherwise be worthless if it simply lapsed.

Actual bids depend on current underwriting data, the particular carrier, reinsurance appetite and investor return targets at the time you shop the case.

Key Consumer Protections in Kansas

Kansas did not just legalize settlements and walk away. The statute and the Insurance Department impose several protections that matter in real life.

Licensing of Providers and Brokers

No one may operate as a viatical settlement provider or broker without first obtaining a license from the Kansas Insurance Commissioner.

Kansas Insurance Department materials reinforce this. Any agent or company arranging viatical settlements must be licensed with the Department.

Rescission Period

Kansas gives you a defined rescission window. Every viatical settlement contract in Kansas must provide the viator with an unconditional right to rescind the contract for at least fifteen calendar days from receipt of the settlement proceeds.

If the insured dies during this rescission period, the contract is treated as rescinded, provided the viator or estate returns the settlement funds and reimburses the provider or purchaser for premiums, loans and loan interest that were paid.

The Kansas Insurance Department's consumer brochure mirrors this in plain language. It tells consumers they have fifteen days after receiving the money to change their mind, if they return all of the funds.

Escrow and Timing of Payment

Kansas requires independent escrow and sets tight timelines.

The provider has to instruct you to send your executed ownership and beneficiary change documents to an independent escrow agent. Within three business days after the escrow agent receives those documents, or after the provider gets them if you sent them to the provider by mistake, the provider must place the settlement proceeds into an escrow or trust account at an FDIC insured financial institution.

Once the escrow agent receives written acknowledgment from the insurer that ownership and beneficiary changes are complete, the escrow agent must release the settlement proceeds to you.

Kansas disclosures also state that funds will be sent to the viator within three business days after the provider has received the insurer's acknowledgment that ownership and beneficiary changes have been processed.

The Insurance Department brochure again lines up with this. It explains that to protect your proceeds, the buyer must place your money in an escrow account with an independent party during the transfer process.

Confidentiality and Contact Limits

The act makes medical information obtained by licensees subject to state confidentiality rules, and requires specific consent forms and limits on how often the buyer can contact the insured to check health status.

The Department's brochure also stresses that the company buying your policy must keep your identity and medical history confidential unless you give written consent, and that there are limits on how frequently the new owner can reach out about your health.

Fraud and Stranger Originated Policies

Kansas treats fraudulent viatical settlement acts and stranger originated life insurance arrangements as violations of the law. This includes schemes where a policy is originated primarily to be sold to investors.

From your perspective, the takeaway is simple. If someone pushes you to buy a new policy primarily to flip it, or to sell a relatively new policy where the story feels contrived, you should assume red flags and contact the Kansas Insurance Department before you do anything.

How the Kansas Life Settlement Process Works

Strip away the statutory detail and the Kansas process looks like this.

Step One: Initial Screen

You or your advisor share the basics. Policy type and carrier, face amount, current premium, cash value, the insured's age and health history, and whether the policy is older than two years or qualifies for an exception. A broker or provider can usually tell quickly if it is worth moving ahead.

Step Two: Authorizations and Records

If the case passes the first screen, you sign authorizations that allow the provider or broker to order medical records and request detailed policy information from the insurer. This step is often the slowest, because doctors and carriers do not rush on their own.

Step Three: Underwriting and Pricing

The provider reviews medical records, orders one or more life expectancy reports, and models premiums and cash flows. Investors then decide how much they are willing to pay today for the right to own the policy and pay the premiums going forward.

Step Four: Offers and Negotiations

You receive a written offer that sets out the gross purchase price and, if a broker is involved, the broker's compensation. In a healthy process your broker will show you more than one offer from different providers so you can see a range.

Step Five: Contracts and Escrow

If you accept an offer, you sign the viatical settlement contract, disclosures, and carrier forms. The provider funds the escrow account. The insurer processes the ownership and beneficiary change and issues written confirmation.

Step Six: Payment and Rescission

Within the timeline disclosed in the contract and in any event within the three business day framework tied to acknowledgment from the insurer, the escrow agent releases funds to you. Your fifteen day rescission period runs from receipt of the proceeds. If you change your mind inside that window, you can unwind the deal by returning the money and reimbursing the buyer for premiums, loans and loan interest it paid.