In a Life Settlement, donors age 65 or older sell their unwanted, unneeded or unaffordable current life insurance policy on the open market in a competitive bidding process to a third party (an institutional buyer or funding company).
The buyer assumes ownership of and beneficiary rights to the policy, pays the premiums and receives the face value of the policy when the policy matures.
The donor receives a lump sum payout of more than the policy’s cash surrender value.
The payout amount (on average 3.6 times greater than the cash surrender value of the policy) is based on such factors as the insured’s policy type, amount of premiums, his or her health status and age.
Most policy types (term, whole life, universal life) are eligible if they were owned for at least two years.
The policy can be owned by an individual, a trust or a corporation, providing the insured is of qualifying age.
All or part of this payout can be donated to the SAG-AFTRA Foundation or used in any other manner a donor sees fit, without restrictions.