Life Settlement Terms

Welcome to our life settlement glossary – a comprehensive resource designed to explain complex insurance terms and concepts. This guide aims to provide clear and easy-to-understand definitions, enabling you to navigate the life settlement landscape confidently and easily. Whether you’re a policyholder, beneficiary, or an interested party, this glossary will serve as your go-to manual for life settlement terminology.

Designated Contact

A Designated Contact is an individual the policyholder selects when selling their life insurance policy. This contact serves as a point of communication for the life settlement servicer, providing updates on the insured’s health status.

Life Expectancy Report

A life expectancy report is a document that provides information on the average number of years a person is expected to live. The report considers age, gender, and health status to determine the average life expectancy rate. It is important to know that no person or company can predict the life expectancy of any individual. It is an average when looking at a particular group of people.

Life Settlement

A life settlement is a financial transaction where an individual sells their life insurance policy for a lump sum of cash. This option is available to individuals who no longer need or can afford their policy and can provide them with much-needed funds during retirement or other financially challenging times.

Life Settlement Broker

A Life Settlement Broker is a financial professional licensed and trained to assist clients in selling their life insurance policies for a lump sum cash payment. They act as intermediaries between the policy owner and buyers, negotiating on behalf of the policy owner to secure the best possible price for their policy.

Life Settlement Calculator

A life settlement calculator is a tool used to determine the value of life insurance policies. This calculator considers factors affecting the policy’s worth, such as age, health status, face value, and other policy details. It estimates how much a policyholder could receive if they sell their policy in the secondary market in a life settlement transaction.

Life Settlement Provider

A life settlement provider is a licensed professional or company that facilitates the sale of an existing life insurance policy from the policyholder to a third-party investor. These providers are responsible for conducting the entire process of a life settlement transaction and ensuring that it complies with state regulations and industry standards.

Life Settlement Servicer

A life settlement servicer is a third-party service provider specializing in managing and administrating life insurance policies sold in the secondary market.

Limited Power Of Attorney

A Limited Power Of Attorney (LPOA)  is a legally binding document that grants someone the authority to act on behalf of another person. This power can be granted for specific actions or tasks and has a defined validity period.

Rescission Period

The Rescission Period occurs after selling a life insurance policy in the secondary market. During this period, the policy owner has the right to cancel the sale and receive the policy back from the buyer. This period typically lasts 15-30 days, depending on state regulations.

During the Rescission Period, the policy owner can change their mind and decide not to sell their life insurance policy.

Retained Death Benefit

A Retained Death Benefit refers to a portion of the death benefit retained by the insured in a life settlement transaction.  This benefit means the policyholder will receive a smaller lump sum payment upon their death in exchange for selling their life insurance policy to a third party. 


Stranger-Originated Life Insurance (STOLI) policies involve a third party, a “stranger,” who purchases the life insurance policy on the insured person’s behalf. The stranger will then pay all premiums and become the policy beneficiary upon the insured person’s death. The “stranger” ultimately owns and controls the policy, making all decisions relating to the policy. 

Viatical Settlement

A Viatical Settlement refers to selling a life insurance policy of an individual who is terminally ill to a third party in exchange for immediate cash. In this arrangement, the policyholder receives an amount that is less than the death benefit but greater than the policy’s surrender value. In a Viatical Settlement, the insured typically has a life expectancy of twenty-four months or less. 

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