When financial advisors and insurance professionals first learn about life settlements, one of the most common questions they ask is:
“What percentage does a life insurance policy usually sell for?”
It’s a reasonable question. Clients want numbers, advisors want benchmarks, and the idea of having a predictable “percentage” makes explaining the concept easier.
The reality, however, is far more nuanced. There is no single, fixed percentage that can be applied to every life settlement case. That’s because the value of a life insurance policy in the secondary market is influenced by a unique mix of factors — including the insured’s age, health, policy type, premiums, and the current appetite of institutional buyers.
To illustrate this, let’s look at two real-world clients, each with a $1 million policy. One policy sold for $10,000. The other sold for $300,000.
Same face value. Completely different results.
Case #1: $1M Term Policy → $10,000 Offer
The first client was a 70-year-old male with a $1 million term life insurance policy. The policy was nearing the end of its 20-year term.
The client had the option to convert the policy to a universal life plan to keep the coverage in force — but doing so would have required paying $40,000 per year in new premiums. He decided against it.
At this point, his only options were:
- Let the policy lapse (resulting in $0 value)
- Explore whether there was any life settlement value in the secondary market
Here’s what made this case challenging:
- The insured was relatively healthy for his age.
- His life expectancy was close to 20 years.
- Institutional buyers (also known as “funders”) typically pay more when life expectancies are shorter, because the investment matures sooner.
After shopping the policy to our extensive network of licensed buyers, only one funder made an offer — $10,000.
Was it a huge payout? No. But compared to the $0 he would have received by letting the policy lapse, this was a win.
The client chose to accept the offer, pocket the cash, and move on — happy to have received something for a policy that otherwise would have disappeared.
Case #2: $1M Universal Life Policy → $300,000 Offer
The second client was a 77-year-old male with a $1 million Universal Life policy. Unlike the first case, this policy was permanent coverage that could remain in force as long as premiums were paid.
This client’s health situation was very different:
- He had significant health issues.
- His estimated life expectancy was 6–8 years.
Because of these health challenges — and the fact that the premiums were sustainable for buyers — the policy was far more attractive in the secondary market.
Multiple funders made offers, competing to secure the policy. The highest bid came in at $300,000 — thirty times higher than the first client’s payout, despite both policies having the same $1 million face value.
The client chose to sell. The cash gave him and his wife the financial breathing room to enjoy their remaining years together, travel, and reduce financial stress.
Why the Values Were So Different
So why did one $1 million policy sell for $10,000 while the other sold for $300,000?
Here are the key factors:
1. Policy Type
- Term Policy (Case #1) — These often have little or no market value unless they are convertible and the insured meets certain health and age criteria. Even then, value is limited if life expectancy is long.
- Universal Life Policy (Case #2) — These are typically more attractive to buyers because they can be kept in force with predictable premiums.
2. Life Expectancy
- A 20-year life expectancy means a much longer wait for the buyer to collect the death benefit. This reduces the present value of the policy.
- A 6–8 year life expectancy creates a faster return on investment for the buyer, making them willing to pay significantly more.
3. Premium Costs
- High premiums relative to policy size can lower offers.
- Lower, more sustainable premiums make a policy more attractive to buyers.
4. Market Competition
- In Case #1, only one funder submitted an offer.
- In Case #2, multiple funders bid against each other, driving the price higher.
The Takeaway for Advisors
The most important lesson here is that there is no “average percentage” in the life settlement market. Two clients with the same face value policy can have radically different outcomes.
For advisors, this means:
- Always check whether a policy has value before letting it lapse or surrendering it for minimal cash value.
- Don’t assume a policy is “too small” or “too healthy” to be worth exploring — even $10,000 can be meaningful to a client.
- Understand the factors that influence offers so you can set realistic expectations with clients.
When to Consider a Life Settlement
A life settlement could be a strong option when:
- The client no longer needs the coverage.
- Premiums have become a financial burden.
- The client wants to unlock cash for other needs (retirement, medical expenses, family support, travel).
- The policy is approaching the end of its term and is convertible.
- The client’s health has changed since the policy was issued.
Why Advisors Should Present the Option
Even if a life settlement is not the right fit, presenting it builds trust with clients. It shows you are looking out for their best interests, exploring all possible options, and finding ways to maximize the value of assets they already own.
At SFS Life Settlements, we’ve seen countless situations where advisors were able to turn an expiring or unwanted policy into a meaningful cash payout — sometimes in the hundreds of thousands of dollars.
And yes, sometimes it’s only $10,000. But that $10,000 could cover months of living expenses, fund a grandchild’s education, or create a more comfortable retirement.
Final Thoughts
The story of these two $1 million policies illustrates an important truth about life settlements: every case is unique.
There is no “one size fits all” answer to how much a policy will sell for. But there is one consistent rule: you can’t know unless you ask.
Call to Action
If you’re an advisor, insurance professional, or estate planner and you have clients with life insurance policies they no longer need, want, or can afford — let’s talk.
Our team at SFS Life Settlements can evaluate the policy at no cost and no obligation. We’ll shop it to our network of 40+ licensed buyers to get the best possible offer.
📞 Call us at (877) 400-4266
🌐 Visit SFS Life Settlements
Help your clients turn an unwanted policy into a valuable asset — whether it’s $10,000, $300,000, or somewhere in between.