What Is a Life Settlement? A life settlement is a transaction in which the owner of a life insurance policy sells that policy to a third party — usually an institutional investor or a licensed settlement provider — for a lump-sum cash payment. The buyer takes over responsibility for paying the ongoing premiums and, when the insured person passes away, collects the death benefit. For the policyholder, the appeal is straightforward: the cash offer is almost always higher than the surrender value the original insurer would pay if you simply canceled the coverage, yet lower than the full death benefit.…
