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As you get older, your life insurance policy becomes more costly. It even can become unaffordable, so it's easy to see why so many people give up their policies. A 2019 study from the Society of Actuaries and LIMRA found that 4% of life insurance policies—worth billions of dollars—lapse every single year. If you need money, there is an alternative you may not have considered: life settlements.
Whether you need cash for high medical bills, a divorce, or other living expenses, it may be possible to sell your life insurance policy to a life settlement provider. However, without federal regulation, it can be tough to know which companies to work with. To find the best life settlement providers, we compared 15 of the leading companies based on reputation, nationwide availability, customer service, sales process, and more. These are the four best life settlement companies the industry has to offer.
Best Overall : Coventry
Coventry earned the top spot on our list because of its size and strong reputation. The company pioneered the life settlement industry by creating a secondary market for life insurance in 1998. It’s the country’s biggest life settlement provider by a large margin—accounting for 40% of all transactions in 2020. Coventry was named the number-one life settlement provider in 2020 by The Deal.
Option for a retained death benefit
Not the fastest sales process
Older age requirement
Minimal details on the company’s website
Coventry conducted the first life settlement transaction and has become the industry’s biggest life settlement provider. The company’s size, long-standing reputation, and industry accolades make it the best choice. The Fort Washington, Pennsylvania-based company has a history of advocating for life settlement regulation.
You can start the life settlement process by submitting a questionnaire, authorization, insurance carrier illustrations, and your past five years of medical records. The company also completes a background check to prevent fraud. Coventry offers a retained death benefit, allowing you to keep part of your policy’s payout after you stop paying premiums.
To qualify, you must be at least 65 years old. Your policy’s death benefit must be at least $100,000, and your life expectancy can’t be more than 20 years. The exact payout depends on variables like your health, the type of insurance policy, the policy’s premiums, and more. Coventry doesn’t charge a brokerage fee to policyholders.
Best for Fast Sales : Abacus Life Settlements
Abacus Life Settlements made our list because of the company’s fast quotes and sale process. You can expect a quote and see what your policy is worth within 24 hours. Abacus will generate a formal offer within 14 to 21 days. The money will then arrive in your bank account within 21 days of accepting the offer. This is faster than the other companies we reviewed and makes Abacus Life Settlements best for fast sales.
Quotes in 24 hours
Fastest life settlement company we reviewed
Option for a retained death benefit
Not available in all states
Abacus Life Settlements is one of the fastest-growing life settlement providers, with 18.5% growth over the past year. Founded in 2004, the Orlando, Florida-based company is our top choice for speedy quotes and fast life settlements. The company beats the competition for fast quotes and sales with artificial intelligence to expedite the underwriting process. The company was named as one of the top life settlement providers of 2020 by The Deal.
You can start the life settlement process by completing Abacus’ one-step qualifier, which provides a fast quote through the company’s website. You also may accomplish the same thing by calling their team. Formal offers are presented within 14-21 days. Money arrives in 21 days or less after accepting.
Abacus is looking for customers in their mid-to-late 70s or individuals with poor health. Most life insurance policy types are accepted with the exception of standard term life, but convertible term is accepted. Policies must have a death benefit of at least $100,000. To determine your payout, Abacus considers your policy type, face value, age, and health status. Abacus’ website says it typically pays six to eight times your policy’s cash surrender value. The company’s average payout is 23.3%.
Best for Client Education : Magna Life Settlements
Magna Life Settlements earned a top ranking for the company’s customer resources. The company offers a free life settlement calculator, several in-depth white papers, a robust company blog, and YouTube channel. Magna Life Settlements offers these resources—which are more robust than competitors—for high levels of consumer awareness and transparency. There is plenty of information for the discerning customer and financial advisor alike, making the company best for client education in our review.
Excellent education materials
Quick quote through the website
Licensed in only 40 states
Longer sale process
Magna Life Settlements is another industry leader with extensive resources for customers, making it the best for client education. The company is based in Austin, Texas, and has been around since 2004.
To start the process, you can use Magna’s free life settlement calculator to get a quote. There’s a complete walk-through of the process, start to finish. The company utilizes a number of fraud prevention tools.
To qualify, you must be at least 65 years old or have a major health issue. Your life insurance policy must be universal, term, or whole life with a death benefit of at least $100,000. To price the policy, Magna considers your premiums, structure, and type of policy, health, and medical history.
Best for Innovation : Q Capital Strategies
Q Capital Strategies made our list because of its commitment to life settlement innovation. The company’s estimate system makes the life settlement process faster and more accurate—including contract processing, pricing analysis, and reporting. Because Q Capital developed the system in-house, the company can offer customers more customization, enhancements, and process transparency. The company is constantly updating the system to make sure it stays ahead of the competition, making it our best for innovation.
Commitment to innovation
Quick quotes through website
Not licensed in all states
Longer sale process
Q Capital Strategies was founded in New York, New York, in 2004. The company’s team boasts more than 50 years of experience in life insurance and life settlements—and leverages technology to stay ahead of the competition.
To start the process, you may get a quick quote through the company’s website. You can learn more about the process through Q Capital’s website where it is laid out in detail. The company has in-depth confidentiality, security, and anti-fraud protocols, but still manages to complete sales in four weeks or less.
You must be at least 60 years old to qualify, with a recent change in health, and death benefit of $50,000 to $50,000,000. The company will accept most types of life insurance but says universal life, survivorship, whole life, convertible term, indexed life, and variable life are most common. To determine your payout, Q Capital considers your age, medical condition, type of insurance policy, rating of your insurance company, and premiums. Like the other providers, there isn’t a brokerage fee for policy sellers.
What Is a Life Settlement Company?
Life settlement companies purchase active life insurance policies from seniors, offering cash settlements to secure the death benefit rights to the policies. The companies become the beneficiaries of purchased life insurance policies and are responsible for paying the premiums required to keep the policies in force. These companies then sell the policies to investors or maintain the policies and later collect the death benefits.
Typically, those over 65 may qualify for a life settlement if they have had a policy long enough to meet state minimum requirements. Typically, the death benefit must be at least $100,000.
How Do Life Settlements Work?
Life settlements offer an alternative to cashing out your policy, also known as getting the policy’s cash surrender value or cash value. After selling your policy, the buyer pays your premiums and receives the death benefit when you die.
Life Insurance Settlement Association (LISA) asserts there are a couple of rules of thumb for life settlements. You will receive more than the policy’s cash surrender value and less than the death benefit. The following four factors will impact exactly how much you will receive:
- The policy's death benefit
- The policy's annual premiums
- How many years are left to pay the premiums and your current life expectancy
- How much of a return on investment the buyer expects to receive
What Is the Difference Between a Life Settlement Broker and Company?
There are two options for selling a life insurance policy: life settlement brokers and life settlement providers (companies that purchase life insurance policies).
Life settlement brokers have a fiduciary duty, which means they must put your interest first. They may collect bids and negotiate the best possible offer for your insurance policy.
Life settlement providers purchase life insurance policies themselves. They make money through institutional investors that purchase the life insurance policies, so there is no brokerage fee. By working with a life settlement provider, you cut out the middle man, which may make the sales process faster.
How Much Do Life Settlements Cost?
Life settlements may not charge any out-of-pocket costs to the individuals selling the policy, but selling through a broker does come with a fee. Most brokers will shop your policy around to life settlement providers for the highest selling price and then collect a commission on the sale.
There may be other fees associated with the sale of your policy, which vary by company. We recommend asking for a breakdown of the costs involved with a life settlement before selling your policy.
How to Choose the Best Life Settlement Company
Finding the best life settlement company depends on many factors, including your age, policy size, and health status. We recommend comparing quotes from multiple life settlement companies to get the best price for your policy. If you choose to work with a broker, make sure to get a breakdown of all commissions or and fees charged for their services before selling your policy through them.
We also recommend only working a reputable life settlement companies or brokers that are licensed in your state.
Who Can Use a Life Settlement Company?
Anyone with a term or universal life insurance policy in place can use a life settlement company, but there are usually age and policy minimums required. For example, many life settlement companies will purchase insurance policies only from individuals aged 65 and older and with a policy value of $100,000 or more.
Are Life Settlements Legal?
Life settlements are legal transactions. A Supreme Court case in 1911 ruled that life insurance is an asset, and like other assets, it can be assigned for value. When the AIDS epidemic swept the country in the 1980s, many terminal patients needed money for treatment. This created a secondary market for selling life insurance policies—providing folks with cash.
Life settlement regulation happens at the state level, with 44 states and Puerto Rico offering protection. States tend to have a waiting period before you can sell a policy as well. Most states also have strict disclosure rules and anti-fraud guidelines.
How We Chose Life Settlement Companies
If you need cash and have thought about selling your life insurance, you may be curious about life settlement companies—and whether they may be right for you. The problem is, it can be tough to distinguish one company from the next. To craft our list, we started with the top 15 life settlement options. We looked into each company's reputation, customer guidance, and nationwide licensing.
We also compared fraud prevention, how long the sale takes, and other features. To finish, we looked at each company's customer service and online transparency in order to select the best life settlement companies.