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

Life insurance is usually bought with a specific goal in mind. Protecting a family. Backing a business obligation. Planning for estate taxes that once felt very real. Years later, circumstances change. Premiums keep coming. The policy no longer fits the rest of your financial picture.

In Nebraska, you are not limited to surrendering your policy back to the insurance company for a modest cash value or letting it lapse. The state allows policyowners to sell qualifying life insurance policies to third parties for cash through the secondary market, commonly known as a life settlement. These transactions are regulated by Nebraska and come with defined rules around timing, licensing, and consumer protections.

Is It Legal To Sell My Life Insurance Policy in Nebraska

Yes. Nebraska regulates life settlements and viatical settlements through its insurance code and Department of Insurance rules. Licensed providers are permitted to buy policies, and licensed brokers are permitted to represent policyowners in these transactions.

Nebraska does not impose unusual consumer carve-outs or special deal structures. The focus is on who may participate, how disclosures are made, and when a policy is eligible for sale.

Who Actually Buys Nebraska Policies

In a Nebraska life settlement, the buyer is a licensed life settlement or viatical settlement provider. That provider becomes the new owner and beneficiary of the policy, assumes responsibility for all future premiums, and ultimately receives the death benefit.

Behind those providers are institutional investors, life settlement funds, family offices, and other professional capital sources. If you work with a licensed broker, that broker represents you and markets the policy to multiple providers so you can compare offers rather than negotiating with a single buyer.

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.

Minimum Payout Requirements For Terminally Or Chronically Ill Insureds

Nebraska mandates minimum payouts to ensure that viators receive a reasonable return when viaticating a life insurance policy. These requirements apply to insureds who are terminally or chronically ill.

Note: The percentage may be reduced by 5% for viaticating a policy written by an insurer rated less than the highest four categories by A.M. Best, or a comparable rating by another rating agency.

How Much Is My Policy Worth In Nebraska

For policyowners who are not terminally or chronically ill, value is set by the market. Nebraska does not regulate pricing for standard life settlements.

Buyers typically look at:

• Age of the insured
• Overall health and expected life span
• Policy type and carrier
• Face amount
• Premium structure and long-term cost

For policies that qualify, settlement offers are often significantly higher than surrender value but well below the full death benefit. The exact number depends on underwriting, premium efficiency, and buyer appetite at the time the policy is marketed.

Waiting Period In Nebraska

Nebraska imposes a five year waiting period before most life insurance policies may be sold in a life settlement transaction.

In practical terms, the policy generally must have been in force for at least five years from its issue date. This rule is designed to prevent policies from being purchased with the intent to immediately resell them.

For standard senior planning, the five year rule should be treated as firm. Nebraska does not provide broad or commonly used exceptions that shorten this waiting period.

Rescission Rights In Nebraska

Nebraska provides a meaningful rescission right after a life settlement contract is completed.

A policyowner may rescind the transaction before the earlier of:

• Thirty calendar days after settlement proceeds are paid, or
• Sixty calendar days after the settlement contract is executed

To rescind, the policyowner must return the settlement proceeds and any premiums or loan interest paid by the provider during that period. If the insured dies during the rescission window, the transaction is treated as rescinded.

This is not a courtesy provision. It is a statutory protection that must be disclosed in Nebraska life settlement contracts.

Escrow And How Funds Are Handled

Life settlement proceeds in Nebraska are handled through an independent escrow or trust arrangement.

In practice, this means:

• The buyer wires funds into escrow
• Ownership and beneficiary changes are processed by the insurer
• After the carrier confirms the changes, escrow releases funds to the seller

You should not be transferring ownership on the promise of later payment. The funds are intended to be secured while the insurer completes the transfer.

Broker And Provider Licensing

Nebraska separates the buyer side from the seller side.

A life settlement provider is the buyer and must be licensed with the Nebraska Department of Insurance.

A life settlement broker represents the policyowner and must also be licensed. Brokers are responsible for disclosures, marketing the policy, and presenting offers.

Using licensed parties is how Nebraska enforces consumer protection in this market.

How The Process Works In Nebraska

A typical Nebraska life settlement follows this sequence:

Most transactions take roughly sixty to ninety days depending on medical record collection and carrier response times.

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.