An Austin-area policy owner can sell an unwanted life insurance policy to a licensed buyer for a lump sum through a regulated transaction called a life settlement, and a qualifying policy generally brings more than the carrier would pay to surrender it. The buyer assumes all future premiums and becomes the beneficiary. You take the cash and owe nothing further.
The Austin metro covers Travis, Williamson and Hays counties, and it has changed shape faster than almost any market in the country. Sun City Texas in Georgetown, along with Round Rock, Cedar Park and Westlake, holds a large and growing population of retirees, many of whom relocated here carrying permanent policies bought decades ago in another state for reasons that no longer apply.
This page covers what qualifies, what Texas law requires in 2026, the paperwork, the timeline, and one Texas-specific issue that changes the math for a lot of families: Medicaid estate recovery.
In This Article
Why This Comes Up So Often in Central Texas
Two patterns dominate. The first is the relocated retiree. Someone sells a house in California or Illinois, buys in Georgetown or Cedar Park, and brings along a universal life policy issued in 1994 to protect a mortgage and a spouse’s income. Both of those risks are gone. The premium is not.
The second is the adult child in Round Rock or Westlake who just got a call about a parent’s hospitalization and is inventorying assets in a hurry. In both cases the policy is real money that had been quietly reclassified in the household budget as a bill.
Qualification in Plain Terms
The first screen is straightforward. Face amount of $100,000 or more. An insured generally 65 or older, or younger with a documented health change since the policy was issued. Permanent coverage, meaning whole life, universal life or guaranteed universal life.
Convertible term can qualify while the conversion right remains open, because the buyer converts it to permanent coverage to keep it in force. Term with no conversion right left rarely has value. Pricing turns on life expectancy and the cost of keeping the policy alive; market settlements commonly land between 10% and 35% of the death benefit, and the GAO’s 2010 study (GAO-10-775) found sellers received roughly four to eight times what surrendering would have paid.
What Texas Law Requires
Life settlements in Texas are governed by Texas Insurance Code Chapter 1111A, which covers life settlement contracts and is administered by the Texas Department of Insurance. Providers, the licensed entities that buy policies, and brokers, who represent sellers, must both be licensed. Disclosure requirements apply, and sellers receive a statutory rescission window after funding, commonly around 15 days; verify Texas’s 2026 figure.
A waiting period normally applies before a policy can be sold, most often two years from issue, with five years in a small number of states. Hardship exceptions typically exist for terminal illness, divorce, retirement or bankruptcy. Confirm what applies to your specific contract rather than assuming the general rule fits.
The Documents, in Order
Start with the policy cover page. One page, showing carrier, policy number, face amount and policy type. That is enough for a free preliminary read on marketability, and nothing else is needed to begin.
If the policy looks viable, the full file adds an in-force illustration ordered from the carrier, a current carrier statement showing cash value and loans, and a signed HIPAA authorization so underwriters can obtain medical records and produce independent life expectancy reports. You authorize each release, and you can stop at any point before signing a settlement contract.
| Option for an unwanted policy | What you receive | Who pays future premiums | Best fit |
|---|---|---|---|
| Keep paying | Death benefit later | You | A beneficiary still depends on the coverage |
| Let it lapse | Nothing | Nobody, coverage ends | Almost never the best answer |
| Surrender to the carrier | Cash surrender value | Nobody, coverage ends | Small policies, or when a settlement is not available |
| Reduced paid-up election | Smaller death benefit, kept in force | Nobody, no further premiums due | Family wants some coverage without the premium |
| Life settlement | Lump sum, commonly 10-35% of face value | The buyer | $100k+ face, insured generally 65+ or with a health change |
| Accelerated death benefit rider | Partial early payout under the existing contract | You, on the remaining coverage | Terminal or chronic illness, if the rider exists |
Care Costs and Texas Medicaid
Nursing home care in the Austin area runs roughly $6,500 a month for a semi-private room and about $8,500 a month for a private room in 2026. Those are ballparks worth verifying against the current CareScout/Genworth Cost of Care survey. Austin prices below many large metros, which is genuinely helpful, but $78,000 a year still empties most retirement accounts on a predictable schedule.
Long-term care Medicaid in Texas runs through STAR+PLUS managed long-term services and supports, with a $2,000 countable-asset limit for a single applicant. A policy’s cash surrender value counts toward that limit, which is why an old policy so often turns out to be the specific thing blocking eligibility.
Texas Estate Recovery Changes the Calculation
Texas runs an aggressive Medicaid Estate Recovery Program. After a Medicaid recipient dies, MERP can file a claim against the probate estate to recover what the state paid for long-term care. Families in Travis and Williamson counties who assumed the house would simply pass to the children sometimes learn about this at the worst possible time.
This is worth thinking about before, not after. A policy converted to cash and legitimately spent on the parent’s care during life is money used for its intended purpose. Assets left sitting in a probate estate are what MERP reaches. There are exceptions and hardship waivers, and how they apply is a question for a licensed Texas elder law attorney, not for a website.
Timeline and Common Delays
Expect roughly 60 to 120 days from first contact to funded. Most of that clock is the carrier producing an in-force illustration and physician offices releasing medical records, neither of which a buyer controls.
If a policy is drifting toward lapse, start now rather than at the end of the grace period. A lapsed policy has no secondary-market value at all, and reinstatement is never guaranteed.
Compare Everything, Then Request a Free Review
Ask your carrier in writing for the current cash surrender value, what a reduced paid-up election would leave in force with no further premiums, and whether the contract already contains an accelerated death benefit or chronic illness rider. Some policies already hold the solution the family is searching for.
Then compare net proceeds after all commissions and fees against those alternatives. Verify any buyer’s license with the Texas Department of Insurance, confirm funds are held by an independent escrow agent, and have your own attorney or CPA read the contract.
Pine Lake Life Solutions reviews policies with $100,000 or more in death benefit. Send the policy cover page for a free, no-obligation review, or call (305) 209-7183.
This page is educational only and is not legal, tax or investment advice. Medicaid limits, insurance statutes and care costs change; verify every figure with the relevant agency and speak with a licensed Texas elder law attorney or CPA before acting.
Frequently Asked Questions
I moved to Austin from another state. Which state’s rules apply?
The governing rules generally follow the policy owner’s legal state of residence at the time of the transaction, not where the policy was originally issued. That matters for the many Central Texas retirees who relocated with older policies. Establish residency clearly at the start so the correct disclosures and rescission period apply.
What is a policy likely to be worth?
Market settlements commonly fall between 10% and 35% of the death benefit, and GAO-10-775 found sellers received roughly four to eight times cash surrender value. The specific figure depends on life expectancy, policy type and the future premium load. No responsible buyer quotes a number before underwriting.
Is there a minimum policy size?
Pine Lake reviews policies with $100,000 or more in death benefit. Below that, the fixed costs of underwriting, escrow and closing usually make a settlement uneconomic. Surrender or a reduced paid-up election tends to be the better path for smaller policies.
How does the Texas Medicaid Estate Recovery Program affect this?
MERP can file a claim against a deceased Medicaid recipient’s probate estate to recover what Texas paid for long-term care. Exceptions and hardship waivers exist, and how they apply depends on the family’s specific circumstances. This is a core question for a licensed Texas elder law attorney early in the planning, not after a death.
Can I sell a term policy?
Only while it remains convertible to permanent coverage under the contract, because the buyer converts it in order to keep it in force. Conversion rights typically expire at a set age or policy year. Check the conversion rider before concluding there is nothing to sell.
Are the proceeds taxable?
They can be. Portions may be treated as ordinary income or capital gain depending on your cost basis and the policy’s cash value, with different rules for terminally ill sellers. Texas has no state income tax, but federal treatment still applies. Get a written analysis from your CPA before closing.
How do I confirm a company is licensed in Texas?
Ask for the exact licensed entity name and license number, then verify it through the Texas Department of Insurance license lookup. Also confirm the transaction uses an independent escrow agent and that you receive the required disclosures and a written rescission right.
What does the free review cost, and am I committed?
It costs nothing and commits you to nothing. Sending the cover page starts a no-obligation review, and you remain the policy owner unless you personally sign a settlement contract. You can stop at any point in the process.
Find out what your policy is worth — free, confidential, no obligation.
A 15-minute educational review covers your eligibility, every alternative, and a realistic view of what each path would net you.
Related Reading
- Life Settlement Vs Surrender
- What Policies Qualify For Life Settlement
- Life Settlement Licensing Texas
- Life Settlement Taxes Texas
- Medicaid Spend Down Austin
- Education Center
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.