How Much Could Your Client’s Policy
Be Worth on the Secondary Market?
Probabilistic DCF modeling using mortality-adjusted life expectancy — the same methodology institutional buyers use to value life insurance policies.
Health is the primary driver of settlement value. Shorter estimated life expectancy produces higher buyer offers.
In a life settlement, the policy owner transfers ownership and beneficiary designations to a third party who receives the death benefit at the insured’s passing — giving the buyer a financial interest in the seller’s death.
A policy owner should consider the continued need for coverage and evaluate less costly alternatives to a life settlement before proceeding. When an individual decides to sell their policy, they must provide complete access to their medical history and other personal information.
A life settlement may affect the insured’s ability to obtain insurance in the future and the seller’s eligibility for certain public assistance programs such as Medicaid. There may be tax consequences — consult a qualified tax advisor before proceeding.
Valmark Securities supervises all life settlements like a securities transaction. Valmark and its registered representatives act as brokers on the transaction and may receive a fee from the purchaser.
For Advisor Use Only. This calculator is an educational tool. Estimates are hypothetical and do not guarantee similar results in a live auction. This is not an offer to purchase any policy. Actual offers require formal life expectancy underwriting and vary by buyer. — AdvisorServe is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc.
2017 CSO Unloaded ANB Mortality Tables
Life expectancy is derived from the 2017 Commissioners Standard Ordinary Unloaded ANB mortality tables, adjusted by a mortality multiplier for health status and smoking — the same debit/credit system used by professional LE underwriters. Note: formal LE reports use proprietary tables and will differ.
Probabilistic Discounted Cash Flow
For each year, the probability of death in that year is multiplied by the death benefit and discounted at the investor IRR. PV of future premiums (weighted by survival probability) is subtracted. The result is a gross policy value before buyer margin.
Competitive Auction Process
Licensed brokers run competitive bidding processes with institutional buyers. In documented cases, broker-mediated auctions have delivered materially more than initial direct offers.⁵ The estimate shown reflects a broker-mediated net result after typical commission.