One of the most common questions I hear is: "Can my policy even be sold?" The answer surprises most people. A significant percentage of policies held by seniors over 65 qualify for a life settlement — but because the industry doesn't advertise this fact, the policies go surrendered or lapsed every day.
This article breaks down the five key qualifications that life settlement buyers look for. You don't need to meet all five perfectly — but understanding these criteria will help you determine whether a settlement conversation makes sense for your situation.
You Are Age 65 or Older
Age is the single most important factor in a life settlement. Most buyers require the insured to be at least 65, with the strongest offers typically coming for policyholders aged 70 to 85. The reason is actuarial: buyers are making a long-term investment based on life expectancy, and age is a primary input in that calculation. If you're in your early 60s but have significant health changes, some buyers may still be interested — it's worth a conversation.
Your Policy Has a Face Value of $100,000 or More
Life settlements involve transaction costs — medical records, underwriting, legal review — that make small policies economically impractical. Most buyers look for a minimum face value of $100,000, with policies in the $250,000 to $5,000,000 range attracting the most competitive bidding. If your policy is below $100,000, a settlement may still be possible in certain circumstances, but the options will be more limited.
You Have a Qualifying Policy Type
Not all life insurance is the same, and the policy type matters to buyers. The following types commonly qualify:
- Universal Life (UL) — The most commonly settled type. Flexible premiums and permanent coverage make these very attractive to buyers.
- Whole Life — Permanent coverage with fixed premiums. Qualifies readily when the policyholder meets age criteria.
- Variable Life — Qualifies in most cases, though the investment component adds complexity to valuation.
- Survivorship (Second-to-Die) — Can qualify after the first insured has passed away.
- Convertible Term — A term policy with a conversion option can be converted to permanent coverage before being settled. This is an important option many people overlook.
Standard term policies without a conversion feature typically do not qualify, as buyers need a permanent policy they can maintain.
The Policy Has Been In Force for at Least Two Years
Most life insurance policies include a two-year contestability period during which the insurance company can contest the policy or refuse to pay the death benefit. Life settlement buyers require the policy to be past this contestability period — typically meaning the policy must have been issued at least two years prior to the settlement. This protects the buyer's investment. In practice, most policies being considered for settlement have been in force for many years, so this qualification is rarely a barrier.
Your Health Has Changed Since the Policy Was Issued
This qualification surprises many people. A change in health since the policy was originally issued — even something moderate — can significantly increase your policy's value to buyers. Common health changes that improve settlement value include a cancer diagnosis, heart disease, COPD, diabetes complications, kidney disease, and other chronic conditions. You don't need to be terminally ill. Any meaningful change in life expectancy increases what buyers will pay.
What If You Don't Check Every Box?
The five criteria above are guidelines, not rigid gates. Life settlement buyers evaluate each policy individually, and a policy that doesn't perfectly meet every criterion may still generate competitive offers. Conversely, a policy that meets all five should almost certainly be evaluated — you could be sitting on significantly more money than you realize.
"I've seen policies get settled that others would have passed on — because we found the right buyer. And I've seen people walk away from policies that could have put six figures in their pocket, simply because no one told them to ask."
The Only Way to Know for Sure
The fastest way to determine whether your policy qualifies — and how much it might be worth — is a free consultation with an experienced life settlement broker. In a short conversation, Allan can tell you whether your situation warrants moving forward and give you a realistic sense of what the market might offer.
There's no obligation, no cost, and no pressure. Just an honest answer to an important question.