What Is Medical Underwriting for Life Settlements?

Rebecca Parson
Rebecca Parson

Rebecca Parson


Rebecca Parson is a financial and tech writer with 10 years of experience writing about topics such as life insurance, commodities investing, and the SaaS industry. She has a master’s degree from Johns Hopkins University and a bachelor’s degree from the University of Mary Washington. Her writing has appeared at money.com, sacbee.com, cart.com, herodevs.com, blanchardgold.com, and more.

Brian OConnel
Brian OConnel

Brian O'Connel


Brian O’Connell has been a contributing writer for U.S News & World Report since 2016. A former Wall Street bond trader and the author of two best-selling books; “The 401k Millionaire” and “CNBC’s Creating Wealth”, he has 20 years experience covering business news and trends, particularly in the business and financial sectors. He believes education is the best gift a financial consumer can receive – and brings that philosophy to every story he writes. His byline has appeared in dozens of top-tier national business publications, including CBS News, Bloomberg, Time, MSN Money, The Wall Street Journal, CNBC, TheStreet.com, Yahoo Finance, CBS Marketwatch, and many more.

By Rebecca Parson, Brian O'Connel
Author, Contributor, Life Insurance

Aside from your policy’s face value, medical underwriting is the most important factor determining how much you’ll get for selling your life insurance policy. We’ve used our 16 years in the life insurance industry to write this concise guide to medical underwriting for life settlements, so you’ll know what to expect.

Understanding Life Settlements

life settlement involves selling your life insurance policy to a third party for more than its cash surrender value but less than its death benefit.

The benefits of selling your life insurance policy include freeing up cash for medical expenses, debt repayment, or any other expenditure. It’s a practical solution if your policy has become financially burdensome or you don’t need it anymore.

Typically, individuals aged 65 or older with a life insurance policy of at least $100,000 qualify for a life settlement. Health status, policy type, and the policy’s cash value also determine eligibility.

The Role of Medical Underwriting in Life Settlements

Medical underwriting is the process of evaluating an individual’s health status to assess their life expectancy. It includes a review of medical records, history of illnesses, and lifestyle factors. Underwriting helps life settlement providers determine how much to offer for a policy.

Medical underwriting is important because it provides a detailed assessment of the policyholder’s health, which underlies life expectancy estimates. A shorter life expectancy typically leads to a higher offer because the buyer anticipates a quicker payout. Conversely, a longer life expectancy may result in a lower offer. 

The Medical Underwriting Process

Understanding medical underwriting can help you know what to expect, and understand why the process takes weeks or months.

Steps Involved in Medical Underwriting

The fundamental steps of medical underwriting for a life settlement are:

  1. The underwriters gather comprehensive medical records and personal health information. This includes details about past and current medical conditions, treatments, medications, and lifestyle factors such as smoking or risky behaviors. 
  2. Next, underwriters analyze this data to evaluate the policyholder’s overall health and life expectancy. 
  3. The underwriters compile this information into a detailed report, including a life expectancy report, which helps determine the policy’s value in the life settlement market.

Understanding Life Expectancy Reports

Life expectancy reports provide an analysis of the policyholder’s potential life span. This includes giving the policyholder a mortality rating, which actuaries use to calculate life expectancy. The lower the mortality rating (also known as the mortality multiplier), the higher the life expectancy. A 100% mortality rating means someone has good health.

The primary companies that create life expectancy reports in the U.S. are:

  • 21st Services
  • AVS Underwriting
  • Examination Management Services
  • Fasano & Associates

Improvements in Medical Underwriting for Life Settlements

Recent improvements in medical underwriting have made life settlements more accessible and beneficial for policyholders. This means:

  • Faster underwriting process
  • More accurate policy valuations
  • Higher potential offers
  • Increased confidence in settlement decisions

Improved data analytics, machine learning algorithms, and electronic health records allow underwriters to quickly and accurately assess a policyholder’s health and life expectancy. These tools reduce the time required to evaluate a policy and provide more accurate life expectancy estimates.

Additionally, mortality tables have more comprehensive and up-to-date information now than in decades past, making them more accurate. A mortality table is a statistical chart that shows the probability of death at each age for a specific population and is used to estimate life expectancy.

Final Thoughts

Selling your life insurance policy is an in-depth, complex process, and it can be helpful to have someone walk you through it. If you’ve decided to sell — or simply have questions — Beca Life is here to educate, so you can make an informed decision.

We can also point you to experienced life settlement brokers or buyers. Get in touch today, and we’ll be glad to answer your questions.

Sell your life insurance policy for cash.

See if you qualify now.

We’re here to help. Speak with a Policy Specialist today at +1 848-456-8333