A life insurance policy is an asset like any other asset such as real estate, stocks, bonds or personal property like an automobile. As a result, a life insurance policy can be sold like any other asset. The sale of a life insurance policy is called a “Life Insurance Settlement”.

A life insurance settlement is a valuable alternative for a life insurance policy owner to realize immediate cash value from a sale of the policy to a third party for a mutually agreed upon price as opposed to simply letting a policy lapse or taking a distribution of the policy’s surrender value. In fact, policy-owners who sell their policies as a life settlement typically receive as much as four or five times greater than the amount they would have received had they simply surrendered their policies to their insurance companies.

Life insurance settlements can provide cash relief for clients that no no longer need, want or can’t afford their existing life insurance.



Usually a settlement is a great alternative in the following circumstances:

(1) the insured has retired and no longer needs income replacement at death or his/her children are grown and no longer need protecting,

(2) the insured sold his/her business and the key person policy is no longer needed, 

(3) the insured purchased the policy as part of an estate tax planning strategy which is no longer necessary, 

(4) the insured is retired and has encountered unexpected long term healthcare expenses,

(5) the insured simply wants to obtain significant cash from a settlement to reinvest in something else or spend it!

(6) the Insured purchased the policy as part of an estate tax planning strategy that no long applies or is necessary

Unfortunately, Americans let their existing policies lapse at the rate of 4% to 5% per year.

$200 billion a year of life insurance goes uncollected resulting from those policy lapses. 90% of seniors who lapsed or surrendered their policy say they would have considered selling their policy through a life settlement if they were made aware of the possibility.

The Penning Group is affiliated with Professional Life Insurance Settlements Plus (PLSP) which is a respected life insurance settlement firm with its home office in Troy Michigan. Based on this affiliation, the Penning Group’s clients receive the benefit of all of PLSP’s extensive resources. The most significant advantage of this affiliation is the access to the markets to offer a life insurance policy for sale.

The sale process involves the offering of an eligible policy for sale in a blind auction format among at least 3 and up to 5 purchasers who bid on the opportunity to purchase the policy. This process results in our obtaining the maximum value for a policy in the settlement and sale process. The potential purchasers of a policy are typically large private equity fund firms including hedge fund programs looking to diversify their investment portfolios. As a result the settlement process is always concluded with a lump sum cash payment to the policy owner.

When  a policy-owner sells a life insurance policy, he/she is taxed on the sale proceeds in three tiers. First, sale proceeds received up to the tax basis (total premiums paid) are free of any tax. Second, proceeds received that are greater than the tax basis up to the amount of the cash surrender value on the policy are taxed at ordinary income tax rates. Third, proceeds received in excess of the amount from tier two get taxed as capital gains.

The process for determining whether a life settlement is a viable alternative is confidential and efficient. There are certain requirements that are necessary to estimate the life expectancy of an insured to determine the potential value of a policy in a settlement. Settling a policy involves analysis of the insured’s current contract and health including:

1. An in-force illustration of the current life insurance policy,

2. Medical Records,

3. A life expectancy calculation for the insured.

The Penning Group assumes payment of any and all fees and costs to complete the obtaining and analysis of the information to determine the viability of a settlement for each client. As a result, a policy holder’;s decision to explore a settlement for the sale of a policy is at no financial risk.

So, if you are a policyholder and the above information is applicable to you, please contact the Penning Group to discuss your situation further in order to determine if a life insurance settlement may be right for you.