Life insurance provides financial security, but circumstances change. If you no longer need your policy or would prefer to access its value now, a life settlement could be an option. Before selling your life insurance for a lump-sum cash payout, it’s essential to understand what factors impact the amount you may receive.

Key Factors in Determining a Life Settlement Payout

Similar to how premiums are calculated when a policy is first issued, various aspects—such as your health, policy type, and financial details—play a role in determining your settlement offer.

1. Life Expectancy and Health Condition

A life settlement provider assesses your age and health since these factors affect the investment value of your policy. Buyers take over premium payments, and the longer you are expected to live, the greater the financial commitment for them. Actuarial tables help estimate life expectancy, which influences the payout.

A serious medical diagnosis can make you eligible for a life settlement earlier than usual and may increase the value of your policy when selling it.

2. Death Benefit Amount

The face value of your policy directly impacts your settlement amount. Policies with higher death benefits tend to be more attractive to buyers and receive larger payouts.

3. Premium Costs

Lower premiums make a policy more valuable in a life settlement, as they reduce the future financial obligation for the buyer. If your policy has manageable premiums, you may receive a better payout offer.

4. Cash Value in the Policy

Some policies, like whole and universal life insurance, accumulate cash value over time. The higher the cash value, the more attractive the policy is, since buyers can use it to help cover future premium payments.

5. Type of Policy

While many types of life insurance can be sold in a settlement, permanent policies—such as whole life and universal life—are particularly desirable. If you own a term life policy, conversion to permanent coverage may be necessary before selling.

Is a Life Settlement Right for You?

Selling a life insurance policy can provide financial flexibility, whether for retirement, medical expenses, or other financial needs. If you’re considering a life settlement, connecting with a provider can help you assess your eligibility and receive a personalized offer.

Are you considering a life settlement for your life insurance policy? Wondering if you’re eligible to sell your life insurance policy? Learn more about selling your policy and find out if you qualify for a life settlement by contacting the experts at Canadian Life Settlements today.