If you’ve ever wondered whether your life insurance policy could hold hidden financial value, you’re not alone. Life settlements offer a unique opportunity for policyowners to convert an unwanted or unneeded life insurance policy into a lump-sum cash payment. But what is a life settlement, exactly? It’s the sale of a life insurance policy to a third party for more than the cash surrender value, but less than the death benefit. This can be an attractive option for seniors facing high premiums, shifting financial priorities, or unexpected expenses in retirement. As you explore this process, one important question to ask is: who does a life settlement broker represent? Understanding the role of brokers and other key players is essential to making an informed decision.
Before you make any decisions, it’s important to understand who a life settlement broker represents–a key factor in making sure your interests are protected during the process.
A life insurance policy is a contract between an individual and an insurance company, designed to provide financial protection for loved ones after the insured person’s death. In exchange for regular premium payments, the insurance company agrees to pay a designated sum–called the death benefit–to the policy’s beneficiaries when the insured passes away.
There are several types of life insurance policies to consider. Term life insurance offers coverage for a specific period, typically 10, 20, or 30 years, and is often more affordable. Whole life insurance and universal life insurance are considered permanent policies and provide lifelong coverage along with a cash value component that can grow over time. Understanding what a life insurance policy is is the first step in making informed financial decisions about long-term security for your family or estate.
A life settlement is a financial transaction in which a policyowner sells an unneeded life insurance policy for more than its surrender value.
Most types of life insurance qualify, including universal life, whole life, variable life, survivorship, group life and even term life.
Policyowners who choose to sell their life insurance policy receive on average more than four times what they would receive from surrendering their policy back to the life insurance company (London Business School Study, June 2013). Every case is different, however, and the size of the payment is determined by variables such as your health, the type of insurance policy you have and the policy’s premiums.
Life settlement calculators that offer “instant” results are based on limited information, typically just the size of the policy and the age and sometimes the general health of the insured. They only provide rough estimates of value that are frequently incorrect.
Because each case is different and we want to provide you with accurate information, we believe that personal attention from an experienced Coventry Direct policy specialist is the best approach.
There are no restrictions on the use of the proceeds. Many policyowners use the money to fund long-term care insurance, cover medical costs and/or supplement their retirement income. The choice is yours.
Coventry Direct typically does not buy term life insurance policies. As a leading life settlement company, Coventry Direct primarily works with permanent life insurance policies such as whole life and universal life insurance. These types of policies include a cash value element, which allows them to be sold on the life settlement market.
Since term life policies do not build cash value, they are generally not eligible for sale through Coventry Direct unless they are convertible to a permanent policy. If you’re unsure about your policy type or its eligibility, Coventry Direct can help review your options.
Coventry Direct is a well-established life settlement company that helps policyholders sell their life insurance policies for a lump sum cash payment. Here’s how the process generally works:
Coventry Direct provides a way for policyholders to access liquidity from their life insurance policies while they are still alive, rather than surrendering the policy or letting it lapse. This can be especially valuable for individuals who no longer need their coverage, are burdened by high premium costs, or simply want to turn an unused asset into immediate cash. Instead of walking away from policy with little or no return, Coventry Direct helps connect policyholders with buyers through the life settlement market–unlocking the true value of their policies. It’s a practical solution that can offer financial flexibility for medical expenses, retirement needs, or other life priorities, all while helping individuals take control of their financial future.
If the face amount of your life insurance policy is at least $100,000 and you have had a change in health, you may qualify to sell your policy.
The learn whether you are eligible to sell your policy, just complete our online qualifier to get started. Or you can call us at or 1.800.268.3687.
Yes. It is possible to sell your policy, eliminate premium payments and keep a portion of the death benefit.
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Selling your policy can supplement your retirement income, free up cash that was being used to pay premiums, fund a long-term care policy, cover unexpected medical expenses or pay off debt. In fact, you can use the money for anything you choose.
And if you still need insurance, you can retain a portion of your coverage while eliminating your ongoing premium payments.
The Tax Cuts & Job Act of 2017 (TCJA) simplified the tax consequences of selling your policy. Unless an exception is met, the sale proceeds will be taxed as follows:
However, for insureds who meet the IRS definition of “terminally ill individual” or “chronically ill individual,” the entire amount of the sale proceeds can be received tax-free.1 For more information on taxes, please click here.
1Coventry Direct does not offer tax or legal advice. You should consult your own tax or legal advisors before entering into any transaction.
"Lisa, the check arrived and I deposited it today. In all my many hours of analyzing, there is one huge thing that I completely overlooked: it was the many hours I was spending. Every month for the past 5 years, I had to make a decision about paying the premium. I don't have to do that anymore. I can spend time on other things."
- Tom W., Client of Coventry Direct
We’re here to help. Speak with a Policy Specialist today at 1-800-COVENTRY