The 6 Best Life Settlement Companies of 2020

Sell your life insurance policy with ease

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As you get older, your life insurance policy only becomes more costly. It may even become unaffordable, so it's easy to see why so many people give up their policies. A recent study from the Society of Actuaries and LIMRA found that 4% of life insurance policies—worth billions of dollars—lapse every single year. But 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 six best life settlement companies the industry has to offer.

The 6 Best Life Settlement Companies of 2020

Best Overall: Coventry

Coventry

 Coventry

Coventry earned the top spot on our list because of the company’s size and strong reputation. The company pioneered the life settlement industry by creating a secondary market for life insurance over 35 years ago. It’s the country’s biggest life settlement provider by a large margin—accounting for 44% of all transactions in 2019. Coventry was recently named the number-one life settlement provider in 2019 by The Deal.

Pros
  • Company longevity

  • Nationwide availability

  • Strong customer service

  • Option for a retained death benefit

Cons
  • Not the fastest sales process

  • Older age requirement

  • Lack of transparency 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. Coventry’s Better Business Bureau profile is currently being updated—so it doesn’t have a rating.

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 does complete a background check to prevent fraud. The sales process may take up to 30 days. Coventry also 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 70 years old or have a serious health condition. 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. The company makes money through institutional investors, which are companies that invest money for individuals.

Best for Fast Sales: Abacus Life Settlements

Abacus Life Settlements

 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 may complete the life settlement within 14 to 21 days, and the money may hit your bank account by the 21st day. This is faster than the other companies we reviewed and makes Abacus Life Settlements best for fast sales.

Pros
  • Quotes in 24 hours

  • Fastest life settlement

  • Option for a retained death benefit

Cons
  • Not available in all states

  • Younger company

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. Abacus is Better Business Bureau-accredited with an A+ rating. The company was recently named as one of the top life settlement providers of 2019 by The Deal. 

You can start the life settlement process by completing Abacus’ one-step qualifier, which provides an instant quote through the company’s website. You may also accomplish the same thing by calling their team. The company completes a federal background check with the sales process taking 14 to 21 days.   

Abacus is looking for customers in their mid-to-late 70s or individuals with poor health. Your life insurance policy must be convertible term, universal, or whole life with 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 they typically pay six to eight times your policy’s cash surrender value. The company’s average payout is 23.3%. Like Coventry, Abacus doesn’t charge a brokerage fee to policy sellers.

Best for Small Policies: Institutional Life Services

Institutional Life Services

 Institutional Life Services

While most life settlement providers are looking for policies with a death benefit of at least $100,000, Institutional Life Services accepts policies as low as $50,000. If you’re short on cash and have a policy smaller than $100,000, Institutional Life Services is our choice as best for small policies.

Pros
  • Accepts smaller policies

  • Licensed in 39 states

  • Strong customer service

Cons
  • Slower sales

  • Limited information on website

  • Newer to the industry

Institutional Life Services (ILS) was founded in 2007 and accepts smaller life insurance policies than other companies on our list. The New York, New York-based provider was a venture between Goldman Sachs, Genworth Financial, and National Finance Partners. Although Institutional Life Services doesn’t have a Better Business Bureau page, the company has built a reputation on ethical practices and transparency. 

Unfortunately, ILS doesn’t offer many details on their website but the company does complete a background check. The sales process may take anywhere from 45 to 70 days. 

To qualify, you must be at least 65 years old and have a documented health change over the past three years. The older you are—and more serious your recent health changes—the more likely you may be to get a life settlement offer. Your policy’s death benefit must be at least $50,000, which is lower than the industry standard. Like the other providers, ILS doesn’t charge policy sellers a brokerage fee.

Best for High Payouts: Habersham Funding

Habersham Funding

 Habersham Funding

Habersham Funding comes in as our top provider for high payouts. The percentage of life settlement payouts may range from just over 1% to Habersham’s high of over 41%. The company paid an average of 41.33% in 2019, which is much higher than the industry average of 20.28%. Habersham Funding’s payouts have again earned them a top ranking from The Deal.

Pros
  • Highest payouts

  • Licensed in almost all states

  • Strong customer service

Cons
  • Longer sale process

  • Limited information on website

Founded in 2001, Habersham Funding’s team has over 150 years of collective experience with life insurance products and 100 years with life settlements. The Atlanta, Georgia-based firm not only offers high payouts, but the company also has one of the leading fraud prevention processes. While Habersham Funding isn’t Better Business Bureau-accredited, the company does have an A+ rating.

Habersham Funding is another company without many details on its website, but the company prides itself on strong fraud prevention. The company has developed a thorough anti-fraud process, which is deeply ingrained in the company’s structure. Habersham Funding has anti-fraud training for each employee—along with an extensive review before finalizing any life settlement. The sales process may take two to three months. 

The company’s payout criteria is similar to others across the industry, based on your type of policy, death benefit, premiums, and more. The biggest difference is Habersham Funding offers a much higher payout than others on our list. This provider also doesn’t charge sellers a brokerage fee.

Best for Client Education: Magna Life Settlements

Magna Life Settlements

 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.

Pros
  • Excellent education materials

  • Quick quote through the website

Cons
  • Only licensed in 27 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. Magna has an A+ rating through the Better Business Bureau but the company isn’t accredited. 

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. Magna has three steps: data gathering (three to seven days), pricing (10 to 20 days), and bid/closing (14 to 20 days).

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. Magna pays out 33% as one of the top life settlement providers. Magna also doesn’t charge policy sellers a brokerage fee.

Best for Innovation: Q Capital Strategies

Q Capital Strategies

 Q Capital Strategies

Q Capital Strategies made our list because of the company’s commitment to life settlement innovation. The company’s QUOTE 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 QUOTE system to make sure it stays ahead of the competition, making it our best for innovation.

Pros
  • Commitment to innovation

  • Quick quotes through website

  • Strong customer service

Cons
  • 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. The company doesn’t have a Better Business Bureau listing.

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 FAQ page. The company has a background check along with in-depth confidentiality protocols with the sales process taking 30 to 60 days. 

You must be at least 60 years old to qualify, with a recent change in health, and death benefit of at least $100,000. The company will accept most types of life insurance but says universal life, survivorship, whole life, convertible term, and whole 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? 

A life settlement occurs when you sell your existing life insurance policy to a third party for a one-time payment. Life settlements offer an alternative to cashing out your policy—a.k.a. 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. You may qualify for a life settlement if you are over 65 years old and have had your policy long enough to meet your state’s minimum. Typically, the death benefit of your policy must be at least $100,000.

Life Settlement Broker vs. Provider 

There are two options for selling a life insurance policy: life settlement brokers and life settlement providers.

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. Brokers may charge from 15% to 30% commission per sale. 

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.    

Are Life Settlements Legal?

Life settlements are a legal transaction. 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 43 states and Puerto Rico offering protection. In 30 states, there is a two-year waiting period before you can sell a policy. Most states also have strict disclosure rules and anti-fraud guidelines.  

How Much Can You Get From Life Insurance Policies?

Life Insurance Settlement Association (LISA) says 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—how much an investor will receive when you pass
  • 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

A study from the U.S. Government Accountability Office (GAO) says sellers received four to eight times more than their policy's cash surrender value from 2006 to 2009. Our research shows payouts may range from 18% to 43%.

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.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy .
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  5. Newswire. "Abacus Settlements Uses Artificial Intelligence to Expedite Life Settlement Underwriting." Accessed July 27, 2020. 

  6. Better Business Bureau. "Abacus Settlements, LLC." Accessed July 26, 2020. 

  7. PR Newswire. "Report: Abacus Once Again Leads All Providers in Capital Deployed and Life Settlement Payouts." Accessed July 27, 2020. 

  8. PR Newswire. "Habersham Funding Again Leads Life Settlement Industry in Consumer Payouts." Accessed August, 2020. 

  9. Better Business Bureau. "Habersham Funding." Accessed July 27, 2020.

  10. Life Insurance Settlement Association. "Explore differences between a broker and a provider." Accessed July 26, 2020. 

  11. Nerd's Eye View. "Life Settlements – Selling A Life Insurance Policy That’s No Longer Wanted For More Than Its Cash Value." Accessed July 26, 2020. 

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  13. Life Insurance Settlement Association. "Life Settlement Regulation." Accessed July 26, 2020. 

  14. Life Insurance Settlement Association. "What is a life settlement?" Accessed July 26, 2020.