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

You bought life insurance in a different stage of your life. You might have been protecting a young family, a business, or an estate tax problem that no longer exists. Years later, premiums feel heavier, long-term care has become a thing, estate planning changed, and the policy may no longer fit the rest of your balance sheet.

In Maryland, you can sell many existing life insurance policies while you are still alive. The state calls these viatical settlement contracts, but the rules cover what most people in the market call life settlements for seniors as well.

The point is simple. If your policy qualifies, you can turn an unwanted or low value contract into lump sum cash upfront, under a regulatory regime that already spells out who may buy, who may broker, and what protections you get.

Is It Legal To Sell My Life Insurance In Maryland

Yes. Maryland explicitly regulates these deals.

The state sets out disclosure statement requirements that a viatical settlement provider must give a viator before a contract is completed, and defines what counts as a violation, including entering into a viatical settlement contract too soon after policy issue.

The Maryland Insurance Administration also runs a dedicated registration regime for viatical settlement providers and brokers.

So if you sell a policy as a Maryland resident, you should be dealing with a registered provider, and if you use a broker, that broker must carry both a Maryland life producer license and a specific viatical registration.

Who Actually Buys Maryland Policies

On paper you sell to a registered viatical settlement provider. That provider becomes the new policy owner and beneficiary, pays all future premiums, and collects the death benefit when the insured passes.

Behind that provider you generally find:

• Institutional life settlement funds
• Hedge and credit funds
• Family offices and other professional capital

Maryland law expects the provider to be registered with the Maryland Insurance Administration as a viatical settlement provider, and it expects the broker who represents you to be separately registered as a viatical settlement broker and to act in your interest as the viator.

You should not be contracting directly with an unlicensed investor.

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 Maryland

The State of Maryland does not fix prices. It regulates process and protections. Pricing is still a market outcome.

The inputs are what you would expect:

• Age of the insured
• Health status and realistic life expectancy
• Face amount of the policy
• Premium structure and duration
• Type of policy (term life insurance can price differently than universal life or whole life) and life insurance company strength and ratings

For seniors with reasonable policy structures and genuine health changes since issue, offers in regulated markets like Maryland often land somewhere between ten and sixty percent of the death benefit, depending on how aggressive the file looks to buyers.

Sample Maryland Scenarios

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

Example One

• Face amount: two million dollar universal life
• Insured: seventy eight year old male with congestive heart failure and diabetes that are now managed but still serious
• Cash Surrender value: twenty thousand
• Settlement offer: around eight hundred fifty thousand

Example Two

• Face amount: one million dollar current assumption universal life
• Insured: eighty four year old female with moderate cardiac history, stable but clearly impaired
• Surrender value: thirty five thousand
• Settlement offer: about two hundred forty thousand

Example Three

• Face amount: four hundred thousand convertible term, converted to permanent coverage for the transaction
• Insured: seventy two year old cancer survivor, under ongoing follow up
• Surrender value: zero
• Settlement offer: about ninety five thousand

The details that move the needle are life expectancy, premium efficiency, and appetite from buyers that actively operate in Maryland at that moment.

Wondering what your policy might be worth in Maryland?

Waiting Period In Maryland

Maryland puts a clear waiting rule in place.

It is a violation to enter into a life settlement transaction within a two year period starting on the date the policy was issued, unless a statutory exception applies.

Exceptions that allow a settlement inside that two year window include:

• A group policy converted to an individual policy where combined coverage time is at least twenty four months
• Situations where the insured has become terminally or chronically ill during the first two years
• Certain corporate or partnership buyout scenarios that were clearly in place when the policy was issued

For normal senior planning the rule of thumb is simple:

• If your policy has been in force more than two years you are past the waiting rule
• If it is newer than that you need to fall into one of the narrow exception buckets and be able to prove it on paper

Rescission Rights In Maryland

Maryland gives you a clear right to change your mind after you get paid.

A viatical settlement provider must give a disclosure statement that includes the viator right to rescind the contract for at least fifteen calendar days after the viator receives the settlement proceeds, provided the viator returns the funds and any premiums or loan interest the provider has paid.

The Maryland Insurance Administration puts the same rule into plain language in its consumer guidance, telling policyowners they have at least fifteen days after receiving money to rescind if they decide the sale is not right for them.

Escrow And How Your Money Is Handled

Maryland expects these transactions to run through an independent escrow.

The disclosure statement must identify the independent third party escrow agent by name, business address, and phone number, and tell the viator that they may inspect or receive copies of the relevant escrow documents.

The Maryland Insurance Administration consumer guide reinforces this in practical terms. It instructs sellers that settlement proceeds should be placed into an independent escrow account to protect their money while ownership and beneficiary changes are being processed by the insurer.

What this means in practice:

• The provider wires the settlement amount into an independent escrow or trust account at a regulated financial institution
• The insurer confirms that the ownership and beneficiary changes have been recorded
• After that confirmation, the escrow agent releases the proceeds to you

You are not supposed to be transferring ownership on the hope that the buyer will pay later. The money is supposed to be sitting in escrow while the carrier finishes its job.

How The Process Works In Maryland

On the ground, a Maryland life settlement looks like this:

Step One: Screening

You or your advisor share age, health basics, types of insurance, face amount, and premiums with a registered provider or broker. They can usually tell quickly whether the case warrants full underwriting.

Step Two: Records

You sign authorizations so the provider or broker can request medical records and a verification of coverage from the carrier.

Step Three: Underwriting And Bidding

The provider orders one or more life expectancy reports, runs premium projections, and decides what range of offers fits its capital requirements. If you are using a broker, they canvas multiple providers.

Step Four: Contract And Disclosures

When there is a real offer, you receive a viatical settlement contract and a separate disclosure statement, including the rescission right, broker compensation, escrow agent information, and your other legal rights.

Step Five: Escrow And Transfer

You sign the contract and the carrier ownership and beneficiary forms. The provider funds the independent escrow account identified in the disclosures. The insurer processes the change and sends written confirmation.

Step Six: Payment And Rescission Window

Once the change is confirmed, the escrow agent releases funds to you. From that payment date, Maryland law gives you at least fifteen calendar days to rescind by returning the proceeds and any premiums or loan interest the provider has advanced.

Most Maryland cases sit in a sixty to ninety day range from first conversation to funding, driven mainly by how fast doctors and carriers respond.

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.