What Is a Life Settlement? How Oregon Policyholders Are Getting Cash for Unwanted Life Insurance

By Rodney Cummings, Legacy Wealth Services | June 2026

Most people don’t know this option exists. They stop paying premiums on a life insurance policy they no longer need — and it lapses. The insurance company keeps years of premium payments. The policyholder walks away with nothing.

But there’s a better option: a life settlement.

A life settlement is the sale of an existing life insurance policy to a third-party investor for a lump sum cash payment. That payment is almost always significantly more than the policy’s cash surrender value — and of course, it’s dramatically better than letting the policy lapse for nothing.

How Life Settlements Work

Here’s the basic transaction:

You own a life insurance policy you no longer need, can no longer afford, or no longer want to pay premiums on
A licensed life settlement company evaluates the policy and makes an offer
You sell the policy for a lump sum — typically 15%–35% of the face value (much more than surrender value)
The buyer takes over premium payments and eventually collects the death benefit
You walk away with cash — today, while you’re alive and can use it

Who Qualifies for a Life Settlement?

Life settlements are generally available to policyholders who are:

Age 65 or older (some providers consider 60+)
Own a policy with a face value of $100,000 or more
Have experienced health changes since the policy was issued (though this isn’t always required)
Own universal life, whole life, term life (with conversion option), or variable life policies

The policy doesn’t need to be lapsing or in trouble. Many healthy 70-year-olds sell policies they simply don’t need anymore — their children are grown, the mortgage is paid, they’ve accumulated enough retirement assets.

Why Would You Consider a Life Settlement?

The policy no longer serves its original purpose. You bought a $500,000 policy when your kids were young and your mortgage was large. Now the kids are independent, the house is paid off, and you don’t have the same financial vulnerabilities you once did.

Premiums are becoming unaffordable. Universal life and term policies often have increasing premiums as you age. If you’re on a fixed retirement income, those $8,000/year premiums may not be the best use of your money.

You need cash for retirement. Healthcare costs, long-term care, home modifications, travel — retirement has expenses many people underestimate. A life settlement can fund these needs without depleting other assets.

You have a terminal or chronic illness. In this case, a viatical settlement (similar to a life settlement) may be available with an even higher payout, often tax-free.

The policy is about to lapse. Rather than walking away empty-handed, a life settlement provides cash for a policy you were about to abandon anyway.

How Much Could Your Policy Be Worth?

The valuation depends on several factors:

Your age and health status — older age and health issues increase the value
Policy face value — larger policies attract more buyers and better offers
Type of policy — universal life policies are most commonly settled; term policies can be if they’re convertible
Premium obligations — lower future premiums make a policy more attractive to buyers
Current interest rates — affect investment return calculations for buyers

As a rough benchmark: a $500,000 universal life policy owned by a 72-year-old in moderate health might receive offers in the $75,000–$175,000 range — versus $0 if the policy lapses or a much smaller surrender value from the insurance company.

What About Taxes?

Life settlement proceeds are taxable — but not entirely, and the tax treatment is more favorable than most people expect:

The cost basis (premiums paid minus any dividends received) is tax-free
The amount above cost basis up to the cash surrender value is taxed as ordinary income
Any amount above cash surrender value is taxed as capital gains

For many policyholders, a significant portion of the settlement is tax-advantaged. We recommend working with your tax advisor alongside your life settlement specialist to understand your specific situation.

What Life Settlements Are NOT

They are not scams. Life settlements are a regulated financial transaction. Oregon has specific laws governing life settlements, including licensing requirements for brokers and disclosures to policyholders.

They are not just for sick people. While health issues can increase value, many healthy retirees complete life settlements on policies they simply no longer need.

They are not quick. The process typically takes 3–6 months from application to funding. It involves medical records, policy review, underwriting, and closing documents. Plan accordingly.

The Broker vs. Direct Provider Question

You can sell a policy directly to a life settlement company — or work through a licensed broker who shops your policy to multiple buyers.

Working with a broker typically results in higher offers because multiple companies compete for your policy. The broker is paid a commission from the settlement proceeds (not by you upfront), so you keep more than you would from a single-company direct transaction.

Legacy Wealth Services works with multiple life settlement providers to ensure you receive competitive offers — not just the first bid from a single company.

Is a Life Settlement Right for You?

If you own a life insurance policy and any of the following are true, it’s worth having a conversation:

You’re 65+ with a policy of $100,000 or more
You’re considering letting the policy lapse or surrendering it
You need cash and have a policy you no longer need
Your financial situation has changed significantly since you bought the policy
Your premiums have increased to the point where they’re a burden

There’s no cost to explore your options. We can assess your policy, explain the process, and determine if a life settlement makes sense for your situation — with no obligation to proceed.

Next Steps

Schedule a no-cost life settlement consultation:

📅 Book a 30-Minute Call with Rodney Cummings

Or explore the life settlement option at legacywealthservices.com/life-settlements

Rodney Cummings is a licensed insurance professional serving Oregon policyholders with life settlements, Medicare, Social Security analysis, and integrated retirement planning. Legacy Wealth Services is independent — we work for you, not the insurance companies.