Why Seniors Rarely Hear About Life Settlements — And Why Advisors Don’t Recommend Them
Every year, millions of Americans over 65 let life insurance policies lapse or surrender them for minimal value. Many of these policies could be sold on the secondary market for cash well above the policy’s surrender value but below the death benefit — an opportunity known as a life settlement. For some seniors, this could mean access to funds for healthcare, long-term care, or retirement expenses. Yet, life settlements remain largely under the radar.
Seniors Aren’t Being Told
The biggest barrier is simple: most seniors don’t know this option exists. Surveys show that the vast majority of older Americans assume a life insurance policy only has value if it pays a death benefit. In reality, policies can be sold while the owner is alive, unlocking liquidity that is otherwise lost when policies lapse or are surrendered. Many seniors would have taken advantage of life settlements if they had been made aware, but information rarely reaches them.
Without knowledge of the secondary market, seniors often default to surrendering policies for small cash amounts or letting them expire, leaving hundreds of thousands of dollars in potential value unclaimed.
Advisors Know — But Stay Silent
Financial advisors are sometimes aware of life settlements but rarely recommend them. Studies indicate that a significant portion of advisors has never guided a client through a life settlement, even when it might have been beneficial.
Several reasons explain this advisory silence:
Misconceptions: Life settlements are sometimes mistakenly associated with past controversies, making advisors wary.
Lack of education: Many advisors feel they do not have enough expertise to confidently recommend a life settlement.
Regulatory and firm policies: Some advisors are restricted from discussing life settlements due to company rules or unclear fiduciary obligations.
This creates a systemic knowledge gap where seniors are left unaware, and advisors avoid addressing a complex, potentially lucrative option.
The Missed Opportunity
The life settlement market is growing, yet the opportunity is largely untapped. Every year, billions of dollars in life insurance coverage lapse or are surrendered at a fraction of their potential value. For seniors, this is more than a financial loss — it’s a missed opportunity to transform a legacy asset into meaningful liquidity that could pay for long-term care, medical bills, or other retirement needs.
Closing the Gap
Increasing awareness requires a three-pronged approach:
Educate policy owners early in retirement planning that life insurance can be sold in the secondary market.
Empower advisors to understand and confidently discuss life settlements with clients.
Align industry standards and policies so advisors can present life settlements as a viable option without restrictions.
When these barriers are addressed, seniors stand to gain substantial financial flexibility — turning a previously hidden asset into a tangible benefit for their later years.