Glossary
A
Abacus Life Settlements
Abacus is a major life settlement provider known for direct-to-consumer engagement and an emphasis on simplified onboarding. They review medical information and policy data to produce structured purchase offers.
They focus heavily on underwriting efficiency and workflow automation, which helps accelerate the review and closing process.
Ashar Life Settlements
Ashar is a life settlement broker that represents policyowners and manages competitive bidding among providers. Their process emphasizes structured valuations and professional policy presentation.
They work with a network of buyers to help sellers capture stronger offers through organized competition.
B
Basis (Cost Basis in Life Insurance)
Basis is the amount you have put into your life insurance policy over time, usually measured as total premiums paid minus certain adjustments or withdrawals. When you sell a life insurance policy in a life settlement, basis is what the tax advisor uses to separate return of premium from taxable gain. Learn more about how life insurance taxation works.
Knowing your basis before you shop offers lets you compare life settlement bids on an after tax basis, instead of just reacting to the headline number.
Broker Commission in Life Settlements
Broker commission is the fee a life settlement broker earns for representing the policyowner and running a competitive bidding process. It is typically a percentage of the final settlement amount and is either taken out of the offer or added on top, depending on structure.
A serious broker will show you the gross offer, the commission, and the net amount you receive, so you can decide whether the broker is actually creating enough value to justify the fee.
C
Cost of Insurance Increase
Cost of insurance, or COI, is the charge inside universal life policies that covers mortality risk. When carriers raise COI rates, premiums can jump significantly.
Sharp COI increases often push policyowners to explore life settlements, surrender options, and litigation. They also change the economics for investors holding these policies.
Coventry Life Settlements
Coventry is one of the largest and longest-standing buyers in the life settlement market. They purchase universal life, indexed universal life, and convertible term policies across a wide range of face amounts.
Their scale and underwriting infrastructure have influenced industry standards around pricing, disclosure, and policy evaluation.
D
Death Benefit Assignment
A death benefit assignment is the formal transfer of the right to receive the policy's death benefit. In a life settlement, the buyer receives an assignment so the insurer knows to pay the proceeds to the new owner when the insured passes away.
This assignment is part of the closing package and is recorded by the insurance company along with the ownership change, so there is no confusion later about who gets paid.
Discount Rate in Life Settlements
The discount rate is the target return life settlement investors use to convert future death benefits and premium outflows into a price they are willing to pay today. A higher discount rate leads to a lower cash offer for the same policy.
When interest rates, credit spreads or risk appetite change, discount rates move, and that is why life settlement pricing can shift over time even if nothing about your policy changes.
E
Eligibility for a Life Settlement
Eligibility is the first filter buyers use to screen whether a policy is worth underwriting. It usually includes age, health profile, policy type, face amount, premium pattern and how long the policy has been in force. See our guide on whether you can sell your life insurance policy.
A policy can be perfectly fine for protection purposes and still fail life settlement eligibility if it is too small, too young, too healthy, or too expensive relative to the benefit.
Escrow Agent
An escrow agent is the neutral third party that holds life settlement funds while the policy transfer is being processed. The provider funds escrow, the agent waits for confirmation from the insurer, and only then releases the money to the seller.
This structure protects the policyowner during closing and avoids the situation where ownership moves but payment is delayed or disputed.
F
Face Amount (Policy Face Value)
The face amount is the stated death benefit of the policy, the number everyone quotes when they say they have a one million dollar policy.
Life settlement offers are usually evaluated as a percentage of face. That lets you compare a proposed sale price to the original coverage and to surrender value in a clean way.
Fixed Premium vs Flexible Premium
Fixed premium policies have level, scheduled payments that do not change over time. Flexible premium policies, like many universal life contracts, allow you to vary contributions within certain limits.
Investors look at this because flexible premium designs can be optimized or mismanaged after purchase. Fixed premium designs are simpler to model but offer less room to adjust funding if conditions change.
G
Grace Period
The grace period is the window of time after a missed premium in which coverage can still be reinstated without full underwriting.
In a life settlement context, buyers pay attention to recent grace periods because repeated near lapses can hint at financial strain or poor servicing, and that may influence how they price or whether they buy at all.
Guaranteed Universal Life (GUL)
Guaranteed universal life is a type of policy designed mainly to provide a guaranteed death benefit to a target age, with little emphasis on cash value. The guarantee is typically tied to following a specific premium schedule.
Many investors like GUL contracts in life settlement portfolios because they are more insulated from crediting rate changes and cost of insurance volatility than traditional universal life.
H
Health Status Check
A health status check is a periodic contact the investor or servicer makes with the insured after a life settlement closes. It confirms that the insured is alive and may note any major health changes.
Most states limit how often these checks can happen each year. The goal is to manage risk and keep records current without harassing the insured.
HIPAA Authorization
A HIPAA authorization in this context is the form that lets a life settlement provider or broker order and review medical records for underwriting. Without a valid HIPAA form, buyers cannot legally access the records they need to estimate life expectancy.
The authorization usually has a set duration and can be revoked, but once revoked the buyer can no longer update medical information, which will affect ongoing valuation.
I
In-force Illustration
An in-force illustration is a projection produced by the insurer that shows how the policy is expected to behave from today forward under current assumptions. It lays out future premiums, cash values and death benefits by year.
In life settlements, the in-force illustration is a core modeling document. It drives premium projections and helps investors answer the question "what does this policy cost to carry through the insured's expected lifetime."
Insured vs Policyowner
The insured is the person whose life is covered by the policy. The policyowner is the legal owner who controls the contract, pays premiums, and has the right to sell the policy.
In many individual policies the insured and owner are the same person. In trust, business, or premium finance structures, they often differ, which affects who signs documents and who receives life settlement proceeds.
J
Joint Life or Survivorship Policy Settlement
A joint life or survivorship policy covers two people and pays the death benefit when both have died. These are common in estate planning for couples.
In a life settlement, survivorship policies can be attractive if both lives are older and the premium load is reasonable. Pricing is more complex because investors must model two mortality curves instead of one.
K
Key Person Life Insurance Settlement
Key person life insurance is coverage a business buys on a critical owner, partner or employee. When the key person retires, the company is sold, or the coverage is no longer needed, the business may be able to sell that policy instead of simply surrendering it.
Settling key person policies can free up cash for the business and clean up the balance sheet, especially when the policy is large and has no remaining strategic value.
L
Life Policy Settlement Options
Settlement options describe the various ways a policyowner can exit a life insurance contract. These include surrendering the policy, reducing the death benefit, using accelerated benefits, or selling the policy through a life settlement.
Understanding these options helps policyowners decide whether a sale provides more value than the alternatives.
Life Settlement Application
A life settlement application collects policy documents, medical authorizations, personal details, and premium histories. This forms the basis of underwriting and valuation.
A clear, complete application shortens the review process and helps buyers generate accurate offers rather than broad estimates.
Life Settlement Broker
A life settlement broker represents the policyowner and gathers bids from multiple licensed providers. Their job is to create competitive pressure, negotiate terms, and guide the seller through underwriting and closing. Learn about the differences between brokers and providers.
A strong broker understands buyer pricing models and knows how to position a policy to maximize value. Their involvement can materially improve the seller's payout.
Life Settlement Calculator
A life settlement calculator provides an early estimate of potential policy value based on age, health, policy type, premiums, and death benefit. It gives policyowners a directional sense of where offers may land. Try our free life settlement calculator or read our comprehensive guide on how calculators work.
Accurate calculators rely on real premium structures and actuarial assumptions. They help people decide whether a full underwriting review is worthwhile.
Life Settlement Fund
A life settlement fund pools investor capital to acquire diversified portfolios of policies. Returns come from the spread between purchase cost and eventual death benefits, minus premiums and fund expenses. Strong underwriting and cashflow management drive long-term performance.
These funds appeal to investors seeking assets with minimal correlation to traditional markets. The strategy hinges on disciplined policy selection, stable premium structures, and accurate longevity assessments.
Life Settlement Litigation
Life settlement litigation spans COI disputes, carrier obligations, contestability issues, policy misrepresentations, and investor-policyholder conflicts. Courts review whether carriers acted within the policy contract and regulatory framework.
Understanding litigation trends helps sellers and investors recognize carriers or product types that may present elevated risk.
Life Settlement Marketplace
A life settlement marketplace is a platform that connects policyowners with multiple buyers. It centralizes underwriting and bidding to produce competitive offers.
Marketplaces improve transparency by showing sellers how different buyers evaluate the same policy and how pricing responds to premium structure and longevity.
Life Settlement Policies
Life settlement policies are life insurance contracts that have been sold on the secondary market. The investor who purchases the policy pays premiums and receives the death benefit.
Policy quality depends on carrier strength, premium efficiency, performance of the underlying contract, and stability of the cost-of-insurance structure.
Life Settlement Provider
A life settlement provider is the licensed entity that purchases a policy from the policyowner. Providers handle underwriting, pricing, regulatory filings, and the formal transfer of ownership. See our guide on finding the best life settlement companies.
They source capital from funds or institutions and serve as the legal counterparty in the transaction. Only providers can complete a life settlement purchase.
Life Settlement Underwriting
Life settlement underwriting reviews medical records, prescription histories, physician notes, and actuarial data to estimate life expectancy. This determines pricing, risk, and whether a policy is worth acquiring. Read our detailed guide on how underwriting and longevity risk work.
Underwriting also includes evaluating the policy mechanics. Premium projections, carrier strength, crediting performance, and cost-of-insurance behavior all influence the economics of a purchase.
Life Settlements
A life settlement is the sale of an in-force life insurance policy by the policyowner to a licensed buyer for a lump sum that exceeds the surrender value. The buyer becomes the new owner, pays future premiums, and collects the benefit when the insured passes away. For many seniors, it is a practical way to unlock value that would otherwise remain trapped in the policy. Read our ultimate guide to life settlements.
The transaction is regulated, structured, and relies on actuarial and medical underwriting. It creates liquidity for people who no longer want the coverage or no longer want to fund rising premiums.
Lighthouse Life Settlements
Lighthouse Life is a provider that focuses on policy acquisitions for seniors seeking liquidity. They underwrite policies and make offers based on premiums, carrier characteristics, and life expectancy.
Their model centers on transparent communication and straightforward policy evaluation.
LifeTrust LLC
LifeTrust LLC is a licensed life settlement provider and broker operating in multiple states. They work with policyowners to evaluate, price, and facilitate life settlement transactions.
Their approach combines technology-driven valuation tools with personalized guidance throughout the underwriting and closing process.
Longevity Risk
Longevity risk is the risk that the insured lives longer than projected. In life settlements, longer-than-expected durations require higher premium outlay and reduce expected returns. Learn more about underwriting and longevity risk.
Managing this risk requires disciplined underwriting, accurate mortality modeling, and conservative purchase assumptions.
M
Medical Records Summary
A medical records summary is a condensed write up of the insured's health history prepared for life settlement underwriting. It highlights diagnoses, medications, procedures and timelines that actually affect life expectancy.
Good summaries save underwriters and investors from having to dig through hundreds of pages of medical files and help speed up both pricing and investment committee decisions.
Mortality Drag
Mortality drag is the effect on portfolio returns when deaths occur later than the combined life expectancy projections assumed at purchase. Even small delays across many policies can pull down performance.
This is one of the reasons investors push for conservative underwriting and why they do not simply chase high face amounts without a tight handle on longevity risk.
N
Net Death Benefit
Net death benefit is the amount the insurer will actually pay at death after subtracting policy loans or other adjustments from the stated face amount.
Life settlement pricing is based on the net death benefit, because that is what investors ultimately collect. A policy with heavy loans will price off the reduced net figure, not the original face.
O
Offer Range in Life Settlements
The offer range is the spread between the lowest and highest bids you receive when multiple buyers evaluate your policy. Different investors often have very different views on the same case.
Looking at the full offer range helps you see where real market value sits and prevents you from jumping at the first number a single buyer puts on the table.
P
Policy Lapse vs Life Settlement
Policy lapse occurs when you stop paying premiums and the grace period runs out, leaving you with no coverage and no payout. A life settlement is a structured sale of the policy for cash before that happens.
Comparing a potential settlement against the alternative of lapse is often the simplest way to see whether you are leaving money on the table by letting the policy go.
Q
Qualification Checklist for a Life Settlement
A qualification checklist is a short list of questions used at the start of the process to see whether a policy is worth submitting to full underwriting. It asks about age, health, policy type, face amount, premiums and issue date.
Running through a quick checklist prevents policyowners from investing time and energy in a settlement process that has little or no realistic chance of producing an offer.
R
Retained Death Benefit
A retained death benefit allows the seller to keep a portion of the policy's future death benefit instead of receiving all cash upfront. The buyer funds premiums on both the purchased and retained portions. Learn more about how retained death benefits work.
This option works well for people who want immediate liquidity but still want their beneficiaries to receive value later. It balances cash needs with legacy goals.
S
Secondary Life Settlement Market
The secondary life settlement market is where policies are first sold by the policyowner to a licensed provider. This is the initial transaction that converts a personal insurance asset into an investment-held asset. Read our guide on understanding the life insurance secondary market.
Pricing in the secondary market is driven by life expectancy, premium load, carrier behavior, and policy structure. This stage establishes the core economics for future trades.
Sell My Life Insurance
Selling a life insurance policy involves transferring ownership to a licensed provider for an upfront payment. The seller exits premium obligations and receives a payout higher than the policy's surrender value. This is sometimes called a life insurance buyout.
People typically consider this path when premiums become burdensome, coverage is no longer needed, or better uses for the capital exist.
Sell My Life Insurance Policy
This refers to the structured process of reviewing a policy, running medical underwriting, and obtaining bids from providers. Universal life and convertible term policies are most commonly sold.
The value depends on longevity, premium efficiency, carrier characteristics, and policy design. A competitive bidding process captures the true market value.
T
Tertiary Life Settlement Market
The tertiary life settlement market involves institutional investors buying and selling policies among themselves after the original acquisition. These transactions rebalance portfolios, adjust risk exposure, or match fund liquidity needs.
The tertiary market adds liquidity to the asset class, allowing policies to be revalued as medical updates, new life expectancy reports, or premium changes come in.
U
Underwriting File
The underwriting file is the full package a buyer assembles when evaluating a life settlement case. It contains medical records, summaries, life expectancy reports, in-force illustrations, policy forms and internal models.
A clean, well organized underwriting file makes it easier for multiple investors to review the same policy and encourages tighter, more competitive pricing.
V
Viatical Settlement
A viatical settlement involves selling a life insurance policy when the insured has a severe medical condition and a shorter life expectancy. Because the expected duration is shorter, the payout is usually higher than a traditional life settlement. Learn about the history of viatical settlements during the AIDS crisis.
Viaticals follow state regulations designed to protect medically vulnerable sellers. They provide immediate liquidity when financial needs become more urgent.
Vida Capital
Vida Capital is an institutional asset manager that acquires life settlement portfolios and other longevity-linked assets. Their role in the market has helped expand available capital and bring greater structure to long-term policy management.
They apply actuarial modeling, premium optimization, and risk management tools to build diversified strategies around mortality-driven assets.
W
Welcome Life Settlements
Welcome Life is a life settlement broker that supports policyowners through underwriting, valuation, and bidding. They analyze policy performance, project premiums, and coordinate offers from licensed providers.
Their focus is on clear policy analysis and efficient negotiation throughout the transaction.
Y
Yearly Renewable Term (YRT) and Life Settlements
Yearly renewable term is coverage where premiums increase each year as the insured gets older. On its own, pure YRT rarely qualifies for a life settlement because there is no long-term asset once the term is over.
YRT becomes relevant if the policy is convertible to permanent coverage. In that case, conversion followed by a potential settlement can sometimes create value before premiums become unmanageable.
Z
Zero Cash Value Policy
A zero cash value policy is one that has no surrender value at the time you check it, often because it is pure term or has been underfunded.
Even with zero cash value, a policy can sometimes be sold in the life settlement market if it is convertible or has attractive mortality and premium characteristics. That is why it is worth checking settlement value before simply walking away.