What Is a Life Settlement?

How the Life Settlement Process Works

The life settlement process is straightforward when handled by a licensed broker. It begins with a confidential policy review to determine eligibility. Windsor examines the type of policy you hold, its face value, and whether premiums are current.

If the policy qualifies, we coordinate with medical underwriters to confirm life expectancy. This allows us to estimate the fair market value of your policy before it ever reaches the marketplace.

Next, Windsor introduces your anonymized policy to a network of licensed institutional buyers. These are regulated investment entities — not individuals — who purchase policies as long-term assets. They submit competing bids, and Windsor presents them transparently so you can see the full range of offers.

Once you select an offer, the buyer becomes the new owner and assumes all future premium payments. Funds are transferred securely through a licensed escrow agent. Most policyholders receive payment within a few days of final closing.

Learn more about the process →

Who Qualifies for a Life Settlement

Life settlements are generally available to policyholders age 75 or older, or to younger individuals who have experienced a change in health since the policy was issued.

Policies most likely to qualify include universal life, whole life, and convertible term life with a minimum face value of around $100,000. The policy must be active and transferable, meaning premiums are current and no irrevocable beneficiary prevents assignment.

Even if your policy has loans or has lapsed recently, reinstatement may restore eligibility. Windsor reviews each case individually — at no cost and without obligation — to determine whether a settlement is possible.

Check your eligibility →

How Much Is a Life Settlement Worth

The value of a life settlement depends on several factors: your policy’s face amount, your age and health, the cost of premiums, and current investor demand. Policies owned by older individuals or those with higher premiums relative to benefit tend to command stronger offers because the buyer assumes fewer years of payments.

While every case is different, settlement payouts typically fall between 10% and 60% of the policy’s death benefit — far more than most surrender values offered by insurance companies.

Because Windsor is an independent broker, we introduce your policy to multiple buyers, not one, creating genuine competition that can significantly increase your final payout.

See how broker would calculate your life settlement →

Are Life Settlements Taxable?

Life settlements are subject to specific tax treatment under the Tax Cuts and Jobs Act of 2017 (TCJA). Generally, a portion of the proceeds equal to the total premiums you’ve paid is tax-free, the amount received above that basis up to the policy’s cash value is taxed as ordinary income, and any remaining gain is taxed as capital gain.

This simplified reporting system, established by the TCJA, removed prior ambiguity about cost basis calculations. However, state tax laws and individual financial situations vary, so it’s important to consult a qualified tax advisor before completing a settlement.

Learn more about life settlement taxes.→

Why Work with a Life Settlement Broker?

Selling a life insurance policy is a complex financial transaction — and not all companies that advertise “cash offers” are independent. Many are owned by the very funds buying your policy, creating the illusion of choice while routing every case to a single buyer.

A licensed life settlement broker represents only the policyholder, not the investor. Our job is to ask the right questions, protect your interests, ensure full disclosure, and bring your policy to a competitive marketplace of licensed institutional buyers.

We negotiate directly with life settlement companies and private funds that have all been buying policies from us since 2012. You’ll see every offer in writing and remain in control until you decide to proceed. 

Learn about Windsor’s role as a broker, including how commission works →

Consumer Protections and State Regulations

Life settlements are regulated at the state level, typically by each state’s Department of Insurance. These laws require that all brokers and providers be licensed, that policyholders receive clear written disclosures, and that payments be made through licensed escrow agents.

Most states also guarantee a right of rescission, allowing you to change your mind within a set number of days after closing. Windsor conducts transactions only in fully regulated states and complies with every applicable rule to ensure safety, transparency, and consumer protection.

Learn more about life settlement regulations that keep your experience safe →

When a Life Settlement Makes Sense

A life settlement can be a smart financial choice when:

• Premiums have become unaffordable or unnecessary.
• You no longer need the coverage (for example, after children are grown or debt is repaid).
• The policy’s cash surrender value is low relative to its market value.
• You want to reallocate assets, fund long-term care, or strengthen retirement income.

In each scenario, Windsor’s job is to ensure you know what your policy is truly worth before making any decision.

Common Questions About Life Settlements

Policyholders often ask whether selling a life insurance policy affects their beneficiaries. Once the policy is sold, the buyer becomes the new owner and beneficiary — meaning the death benefit is paid to them, not the original family beneficiaries.

They also ask how long the process takes. On average, most Windsor clients complete their settlement within four to six weeks, depending on how quickly medical and policy records are provided.

If you’re concerned about privacy, rest assured that your medical and financial information is handled in accordance with strict state and federal confidentiality standards.

Getting Started with Windsor

If you’re considering a life settlement, start with knowledge — not pressure. Windsor Life Settlements can review your policy confidentially and provide a clear picture of what it may be worth in today’s market.

You’ll receive honest feedback, transparent explanations, and no obligation to sell. If your policy qualifies, we’ll handle every step of the process with care, professionalism, and compliance.

Your life insurance is an asset. Windsor ensures you understand its true value before you decide what to do with it.