Life Insurance is an asset. A life settlement is the sale of an existing life insurance policy for more than the cash surrender value and less than the death benefit.
The reasons policy owners sell their policies are as follows:
The policy owner no longer needs the policy for estate tax planning purposes.
The policy is too expensive to maintain.
Business owner retiring and no longer needs key man policy.
Spouse predeceases insured.
The sale creates liquidity for other planning needs.
The insured needs to pay for uninsured long-term care needs.