Candidates for life settlements are typically age 65+ or older and own a life insurance policy with a face amount in excess of $100,000.

Selling a life insurance policy, and thus, a life settlement, is only possible when the policy’s market value exceeds the cash surrender value.

Key factors in determining the market value of an insurance policy are the death benefit, the cost of future premiums, and the life expectancy of the insured.

Life expectancy is the key component in determining the market value of a life settlement transaction.

The lower the premiums and the shorter the life expectancy, the higher the selling price. This is because the greater the amount of premiums that need to be paid and the longer the investor must wait for the death benefit, the lower the policy value.

Key characteristics of successfully selling a life insurance policy through the settlements market generally include:

  • The insured is age 65 or older
  • Those insured have life expectancies of less than 12 years
  • Those insured may have one or more health impairments

Universal life, term life, and second to die policies are most common settled.