FAQ
FAQ
Frequently Asked Questions
A life settlement is the sale of an existing life insurance policy to a third-party buyer for more than its cash surrender value and less than its death benefit. The policy owner receives an immediate cash payment, and the buyer assumes responsibility for future premium payments and receives the death benefit when the insured passes.
Qualification depends on a combination of factors, including the insured’s age, health profile, policy type, face amount, and ongoing premium obligations. While life settlements are often associated with seniors, age alone does not determine eligibility. The best way to know whether a policy qualifies — and what it may be worth — is through a formal evaluation.
Most permanent life insurance policies — including whole life, universal life, and variable life — may qualify for a life settlement. Certain term policies may also be eligible depending on their structure and market interest. Each policy is evaluated individually based on its specific characteristics.
Yes. Depending on the policy type, it may be possible to sell only a portion of the policy rather than the entire death benefit. In some cases, policy owners can access liquidity while retaining a reduced death benefit — sometimes without any ongoing premium obligations. Partial life settlements offer flexibility beyond a traditional full sale.
A policy’s market value is driven primarily by two factors: how much it costs to maintain and how buyers assess life expectancy. Health changes, policy structure, premium efficiency, and original underwriting all play a role. Knowing how to position these variables — and how to present them to the market — is what separates a good outcome from a great one.
Life settlement proceeds are generally divided into three tax categories:
- Tax-free: Up to the total premiums paid (cost basis)
- Ordinary income: Gains above basis up to the policy’s cash surrender value
- Capital gains: Amounts exceeding the cash surrender value (typically long-term)
Tax treatment varies based on individual circumstances. Policy owners should consult a qualified tax advisor. – Reference: IRS Revenue Ruling 2020-05
Yes. Life settlements are regulated at the state level, with licensing, disclosure, and consumer protection requirements. Evergreen operates in compliance with applicable regulations and works only with licensed providers and counterparties.
Tax treatment varies based on individual circumstances. Policy owners should consult a qualified tax advisor. – Reference: IRS Revenue Ruling 2020-05
Yes. Personal, policy, and medical information is handled with strict confidentiality and shared only with vetted buyers under secure protocols. Protecting privacy throughout the life settlement process is a top priority.
A life settlement broker acts as a fiduciary advocate for the policy owner. This includes aligning priorities, maintaining transparency, managing the market process, and negotiating with buyers to maximize value. Expertise matters — particularly when navigating a sophisticated buyer landscape.
Yes — and it’s more common than most people realize. While term policies serve an important purpose, needs often change over time, and nearly all term policies never pay a death benefit. In some cases, clients can sell a portion of the policy, converting part of the coverage into immediate value while retaining the remainder as protection. A life settlement can uncover value that might otherwise be lost when a policy is surrendered or allowed to lapse.
Yes. While a decline in health often increases a policy’s market value, the life settlement market has expanded significantly. Certain buyers actively seek policies held by healthy insureds with specific profiles. Policy type, face amount, and premium efficiency can all make a policy attractive regardless of health status. A formal evaluation costs nothing and may reveal value where none was expected.
No. The process is far less invasive than many expect. Buyers rely on existing medical records rather than a physical exam to assess life expectancy. Evergreen coordinates the collection of those records as part of the standard process, keeping it straightforward for both advisors and their clients. The first step is simply sharing basic policy information to determine whether a case is worth pursuing.
