A life insurance policy you no longer need can be sold to a licensed buyer for a lump sum, and that sum is usually larger than the cash surrender value your insurer would pay. The transaction is called a life settlement: ownership transfers, the buyer takes over the premiums, and you receive cash while you are alive.
In the Chicago area, this comes up across Cook, DuPage, Lake, Will, Kane and McHenry counties, with the heaviest concentration of older homeowners on the North Shore around Evanston, Skokie and Northbrook, out in Naperville, and in the southwest suburbs near Oak Lawn. A lot of that coverage was bought in the 1980s and 1990s for reasons that no longer exist.
Start with one page. The policy cover page shows the carrier, the face amount, the issue date and the owner — enough for a free review to tell you whether the policy has market value. Send the policy cover page for a free, no-obligation policy review, or call (305) 209-7183.
In This Article
- Illinois Rules That Govern the Sale
- Which Policies Are Worth Reviewing
- The Four Documents in a Complete File
- Timeline, Escrow and Your Right to Change Your Mind
- What Care Costs in the Chicago Area, and Why People Sell
- Never Compare an Offer to Zero
- Taxes and Who Else Should Be at the Table
- Frequently Asked Questions
Illinois Rules That Govern the Sale
Life settlements in Illinois are governed by the Illinois Viatical Settlements Act, 215 ILCS 158, administered by the Illinois Department of Insurance. The statute licenses the companies that buy policies and the brokers who shop them, sets disclosure obligations, and gives sellers a rescission right after funding.
There is also a minimum time a policy must have been in force before it can be sold. Two years after issue is the common standard, a small number of states use five, and hardship exceptions are frequently available for terminal illness, divorce, retirement or bankruptcy. Verify Illinois’s current 2026 waiting period and exceptions with the Department before assuming your policy is eligible.
Which Policies Are Worth Reviewing
Four things drive whether a policy has secondary-market value: the death benefit, the type of coverage, the insured’s age and health, and the cost of keeping the policy in force. As a working rule, a death benefit of $100,000 or more, permanent coverage or convertible term, and an insured typically in their seventies or older make a policy worth a look.
Whole life, universal life and guaranteed universal life all trade. Term insurance trades only when the conversion privilege is still open. If nobody is depending on the death benefit and the premium is a strain, the policy has already stopped doing its original job.
The Four Documents in a Complete File
A finished submission generally contains the policy cover page, a current in-force illustration ordered from the carrier, a recent carrier statement showing cash value and premium status, and a signed HIPAA authorization allowing medical records to be reviewed by underwriters.
You do not need all four to begin. The cover page alone supports an initial free read. The in-force illustration usually takes the longest, because it must be requested from the insurer and can take a couple of weeks to arrive, so requesting it early is the single best way to shorten the overall timeline.
| Step | What happens | Typical time |
|---|---|---|
| 1. Free review | You send the policy cover page | 1–2 business days |
| 2. File assembly | In-force illustration, carrier statement, HIPAA authorization | 2–4 weeks |
| 3. Underwriting | Independent life expectancy reports ordered | 3–6 weeks |
| 4. Offer and contract | Gross offer, net to seller, disclosures | 1–2 weeks |
| 5. Escrow and transfer | Carrier confirms ownership change, escrow releases funds | 2–4 weeks |
Timeline, Escrow and Your Right to Change Your Mind
Roughly 60 to 120 days from submission to funding is normal. Underwriting, carrier responses and independent life expectancy reports account for most of the calendar.
Money moves through an independent escrow agent, not directly from buyer to seller. Escrow holds the purchase price until the carrier confirms the change of ownership and beneficiary, then releases it. After funding, Illinois provides a statutory rescission window — commonly around 15 days, though the current Illinois figure should be verified for 2026 — during which a seller can unwind the sale by returning the proceeds.
What Care Costs in the Chicago Area, and Why People Sell
Nursing home care in the Chicago market runs roughly $8,500 a month for a semi-private room and about $10,500 for a private room in 2026. Treat those as ballpark figures and check them against the latest CareScout/Genworth Cost of Care survey before you plan around them.
Long-term care Medicaid in Illinois runs through HealthChoice Illinois managed long-term services and supports and the Community Care Program, with a $17,500 individual countable-asset limit. Illinois raised that ceiling from $2,000 in 2023, making it one of the most generous in the country; verify the 2026 number. Illinois has also had a long-standing application backlog, which is why families here so often need private-pay bridge funding while an application sits pending.
Never Compare an Offer to Zero
Before evaluating any settlement offer, get two numbers from your carrier in writing: your current cash surrender value, and the reduced paid-up death benefit you would keep if you stopped paying premiums entirely. Those are the alternatives a settlement has to beat.
Settlements are commonly cited in the range of 10% to 35% of face value, and the Government Accountability Office’s 2010 study (GAO-10-775) found settlements paying roughly four to eight times what the same policies would have produced at surrender. Those are ranges observed across many transactions, not a prediction about yours.
Taxes and Who Else Should Be at the Table
Settlement proceeds are generally taxed in layers, with amounts up to your cost basis treated as a return of premium and amounts above that potentially taxable at different rates. The 2017 tax law simplified how basis is calculated for these transactions. Talk to a CPA about your specific policy; nothing here is tax advice.
If Medicaid eligibility, a trust or a spouse’s finances are involved, bring in a licensed Illinois elder law attorney too. Then Send the policy cover page for a free, no-obligation policy review, or call (305) 209-7183. Pine Lake Life Solutions reviews policies of $100,000 or more in death benefit, and the review costs nothing and obligates you to nothing.
Educational information only — not legal, tax, or investment advice. Verify 2026 figures with the agency involved or a licensed Illinois professional.
Frequently Asked Questions
Who regulates life settlements in Illinois?
The Illinois Department of Insurance, under the Illinois Viatical Settlements Act at 215 ILCS 158. That statute licenses providers and brokers and sets disclosure and rescission requirements. You can check a company’s license with the Department before sending documents.
How long has my policy had to be in force?
Two years after issue is the common standard nationally, with a few states using five and hardship exceptions for terminal illness, divorce, retirement or bankruptcy. Verify Illinois’s current 2026 requirement with the Department of Insurance.
How much will I get?
It depends on the insured’s age and health, the policy type, future premium cost and the carrier. Published ranges commonly run about 10% to 35% of the face amount, and settlements have historically paid several times cash surrender value. Only a review of your policy produces a real number.
Does selling hurt Medicaid eligibility in Illinois?
A sale at fair market value is not a gift, so it generally does not create a transfer penalty, but the cash you receive is a countable resource. Illinois currently uses a $17,500 individual asset limit. Talk to an Illinois elder law attorney about sequencing.
Can I sell just part of the death benefit?
Some transactions are structured to retain a portion of the death benefit for the family while selling the rest. Availability depends on the buyer and the policy. Ask about it specifically if leaving something behind matters to you.
What if I stop wanting to sell partway through?
You can stop at any point before closing, and Illinois provides a rescission window after funding as well. Verify the current window length for 2026 before relying on a specific number of days.
Do I need to live in Cook County?
No. Owners throughout Cook, DuPage, Lake, Will, Kane and McHenry counties go through the same process, and nearly all of it happens by mail and secure upload rather than in person.
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Related Reading
- What Policies Qualify For Life Settlement
- Life Settlement Vs Surrender
- Life Settlement Licensing Illinois
- Life Settlement Taxes Illinois
- Illinois Medicaid Asset Income Limits
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.