A life settlement is a financial transaction in which a policy owner sells a life insurance policy that they no longer need, want, or can afford to a third party. For the policy owner, a life settlement is an alternative to a policy lapse or surrender.

 

Policies are purchased at a discount to their face value, and each purchase is modeled after a real estate transaction. A purchaser acquires the entire, or “whole,” policy, with no fractional or pooling interest.

 

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