Life Settlement Services – Frequently Asked Questions

What is a life insurance policy?

A life insurance policy is a contract between an individual and an insurance company, designed to provide a financial benefit for designated beneficiaries 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 a more affordable option compared to permanent policies. 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.

Choosing the right policy for your current and future financial situation is an important step in effective financial planning. For situations where a policy purchased long ago no longer fits your current needs, life settlements are a viable option for recouping premiums above and beyond any accrued cash surrender value. Find out if your policy qualifies with our instant policy evaluation.

What is a life settlement?

A life settlement is a financial transaction in which a policyowner sells an existing life insurance policy to a licensed life settlement provider for more than its cash surrender value but less than the total face amount. The buyer takes over future premiums and receives the death benefit at maturity.

What types of life insurance policies can be sold?

Most types of life insurance qualify, including universal life, whole life, variable life, survivorship, group life and even term life. Coventry Direct can help you determine if your policy may qualify with our instant policy evaluation.

How much can I expect to receive if I sell my policy?

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 company¹. Every case is different, however, and the size of the payment is determined by variables such as the insured’s health, the type of insurance policy you own and the policy’s premiums.

Why doesn't Coventry Direct offer a life settlement calculator?

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.

Can I use the cash from selling my policy any way I want?

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.

Does Coventry buy term insurance?

Yes, Coventry can purchase qualifying term life policies. In most cases, term policies must be convertible, but there may be situations where this is not necessary. Coventry Direct can evaluate your term policy to help you understand if it may qualify.

How does a Life Settlement Company like Coventry Direct work?

Coventry Direct helps policyowners understand if their life insurance policies can be sold for a lump sum cash payment. Here’s how the process generally works:

1. Evaluation: Individuals submit their life insurance policies for review. This is typically done by filling out an online form or speaking with a Coventry Direct policy specialist.
2. Assessment: Coventry Direct evaluates the policy based on several criteria, including the insured’s age and health, the type of policy, the death benefit, and any accumulated cash value. If the policy qualifies, Coventry Direct will refer your policy to Coventry First, a licensed life settlement provider.
3. Offer: If the policy meets Coventry First’s purchase criteria, they may present a cash offer or a combination of cash and reduced coverage with no future premiums.
4. Sale: If the policyowner accepts the offer, Coventry First will place the cash payment into an escrow account while the policy ownership status is changed with the life insurance carrier.
5. Payment: Once the ownership change is finalized, Coventry First will release the funds from escrow for transfer to the policyowner. Coventry First will take over future premiums and may receive the death benefit at maturity.

Coventry enables policyowners 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. Don’t lapse or surrender your policy without finding out what it’s worth. The answer may surprise you.

Do I qualify for a life settlement?

Eligibility is largely determined by policy type. In the event you own a Guaranteed Universal Life or qualifying Universal Life policy of $250,000 or more, you may qualify for the Enhanced Cash Value^SM program, which enables policyowners to access liquidity from their policies in as little as one week with no medical records or underwriting required.

For those who own other policy types of $100,000 or more, such as whole life, term life, variable life, survivorship, or universal life policies that don’t qualify for the Enhanced Cash Value^SM program, the insured must be age 65 or older or have had a significant decline in health since the policy was first purchased.

To learn whether your policy is eligible, simply complete our online evaluation request form to get started. Or you can call us at or 1.800.268.3687.

Can I sell a portion of my life insurance to a life settlement company?

Yes. It is possible to sell your policy while maintaining some coverage with no future premium obligations. It’s called a Retained Death Benefit and can be combined with a lump-sum cash payment for a combination of cash and coverage with no future premiums.

Is my information kept confidential?

Keeping your personal information confidential is extremely important to us. To review our privacy policy, please click here.

How can a life settlement help me?

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 some life insurance coverage, you can retain a portion of the death benefit while eliminating ongoing premium payments with a Retained Death Benefit.

How are life settlements taxed?

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:

1. Tax Free – Proceeds you receive up to your tax basis (i.e., the total amount of premiums you paid over time) are not taxable;
2. Ordinary Income – Proceeds you receive in excess of your tax basis up to the amount of your policy’s cash surrender value are taxed as ordinary income; and
3. Capital Gains – Remaining proceeds are taxed as capital gains.

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-free². For more information on taxes, please click here.