Yes — you can sell an Auto-Owners Life variable universal life policy through a life settlement, provided you and the policy qualify. The buyer purchases the insurance contract from you; the carrier’s permission is not required, and Auto-Owners Life is not a party to the decision. Its role is administrative — recording the new owner and beneficiary after closing.
VUL is the most moving-parts policy type in the settlement market. Your cash value sits in separate-account subaccounts that behave like mutual funds, so the surrender value quoted this month is not the surrender value next month. That volatility changes how you should read your statement, how you should time your decision, and what a buyer is actually paying for.
Auto-Owners Life Insurance Company is the life subsidiary of Auto-Owners Insurance, a Michigan-based mutual group founded in 1916 that distributes exclusively through independent agents. Verify current product and rating details with the carrier as of 2026. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Auto-Owners, and this page is education only — not legal, tax, or investment advice.
In This Article
Your VUL Statement Is a Snapshot, Not a Number
On a whole life policy, the cash surrender value column is a schedule — you can look up next year’s figure. On a VUL, that column is a photograph of a moving object. The account value is whatever the subaccounts were worth on the statement date. A rough quarter in the markets can knock it down meaningfully; a strong one lifts it.
This matters for two practical reasons. First, if you are comparing surrendering against selling, you are comparing a fixed offer to a floating number, and the honest comparison uses the current value on the day you decide — not a figure from an annual statement mailed nine months ago. Second, a falling account value in a VUL is not just a smaller savings balance. It is less money available to absorb the policy’s monthly charges, which pulls the policy toward lapse.
The Charges Working Against an Underfunded VUL
Every month the insurer deducts from your account value:
- Cost of insurance (COI). The pure mortality charge, and it rises with the insured’s age — gently in the 50s, sharply in the 70s and 80s.
- Mortality and expense risk charges (M&E). An asset-based charge on the separate account, typically expressed as an annual percentage.
- Administrative and policy fees. Flat monthly charges.
- Fund-level expenses. Charged inside each subaccount, on top of the policy charges.
Stack those against an account value that is no longer growing and you get a squeeze. The COI is rising just as the balance funding it is shrinking. This is why so many VUL policies bought in the 1990s and 2000s now generate premium-increase letters in the owner’s 70s. If you have received one, that letter is a signal to review options, not a bill to quietly pay.
What a Buyer Is Actually Buying
Here is the part that surprises most VUL owners: buyers are largely indifferent to your subaccount balance. When a settlement closes, the buyer takes over the contract and typically reallocates the investments — often into the most conservative option available, such as a fixed or money-market subaccount — because the buyer wants the death benefit, not market exposure.
What they price is the death benefit, the estimated life expectancy of the insured, and the premium required to keep the contract alive to that date. The account value matters mainly because it reduces the premium the buyer must pay in the early years. So a VUL with a healthy balance is cheaper to carry and can support a stronger offer, but the balance itself is not being purchased at face value.
Market-wide, GAO research (GAO-10-775) found sellers typically received roughly 10% to 35% of face value and about four to eight times their cash surrender value. On a VUL, remember that the surrender-value side of that comparison is itself a moving target.
| VUL Component | What It Does to Your Policy | How a Buyer Treats It |
|---|---|---|
| Subaccount balance | Moves with the markets; funds monthly charges | Lowers the cost to carry, but is not bought at face value |
| Mortality & expense (M&E) charge | Ongoing asset-based drag on the account | Built into the projected premium |
| Cost of insurance | Rises every year with the insured’s age | Central to pricing the policy |
| Surrender charge (early years) | Reduces what surrender would pay | Irrelevant to the buyer, relevant to your comparison |
| Policy loan | Cuts the death benefit and removes invested funds | Deducted from any offer |
Documents to Pull for a VUL Review
A VUL file needs a bit more than a fixed-interest policy:
- Policy cover page — insurer, policy number, face amount, issue date. Enough on its own for a free review.
- Most recent quarterly or annual statement — current account value, surrender value, subaccount allocation, and any surrender charges still in effect.
- In-force illustration at current and guaranteed assumptions. For a VUL, also request illustrations at a low assumed rate of return (often 0% and a conservative rate) — the optimistic default illustration hides the lapse risk.
- Loan details, since loans against a VUL both reduce the death benefit and remove money from the subaccounts.
- HIPAA authorization for life-expectancy underwriting.
Because Auto-Owners distributes only through independent agencies, your agency can usually order these. Confirm the correct life-service line with the carrier as of 2026 rather than calling the property and casualty number. See how to read an in-force illustration.
Surrender Charges and Timing
Many VUL contracts carry a surrender charge that declines over the first 10 to 15 policy years. If yours is still inside that period, surrendering costs you twice — you take the market value and then pay a penalty out of it. That widens the gap between what surrender pays and what a settlement might pay, and it is one more reason to get an actual comparison rather than assuming.
On timing more generally: there is no way to time markets, and waiting for a rebound in the subaccounts is not a settlement strategy, since buyers are not paying for the balance. What does change over time is the insured’s age and health, and both usually move in the direction of higher offers — while the policy’s lapse risk moves in the direction of losing everything. Decide based on the lapse date in your illustration, not the market.
Process and Realistic Timing
Plan on 60 to 120 days end to end. Free review of the cover page comes first, usually within a few days. If the policy is a candidate, expect two to six weeks to assemble the illustration and medical records and produce life-expectancy estimates. Offers follow, in writing, with gross and net figures disclosed. Funds are placed with an independent escrow agent before ownership transfers — never sign over a policy against a promise to pay later. Auto-Owners Life then records the change and escrow releases your payment, after which most states provide a rescission window.
Keep paying premiums throughout. A VUL that lapses mid-process leaves you with nothing to sell and no coverage.
Should You Sell, Restructure, or Keep It?
Three questions decide it. Does anyone still depend on this death benefit? Can you comfortably pay the premium the in-force illustration says is required? Would cash today solve a bigger problem than the coverage solves later?
If the answer to the first two is yes, keep the policy — or ask the carrier whether reducing the face amount lowers the required premium enough to make it sustainable. If the coverage is no longer needed and the premium is a strain, compare a settlement against surrender honestly using current numbers; start with life settlement vs. surrender and is a life settlement worth it. If you hold other Auto-Owners Life coverage, see the universal life guide or the group life guide. To begin a free review, send the policy cover page or call (305) 209-7183.
Frequently Asked Questions
Can I sell a VUL policy even though the cash value keeps changing?
Yes. Buyers price the death benefit, the insured’s estimated life expectancy, and the premium needed to keep the policy in force. The subaccount balance affects the cost to carry rather than being purchased outright, so day-to-day market moves do not block a sale.
Should I move my subaccounts to cash before selling?
That is an investment decision and this page cannot advise on it. Be aware that buyers typically reallocate the investments after closing anyway. Talk to your financial professional about whether reducing volatility fits your own situation while a transaction is pending.
What are M&E charges?
Mortality and expense risk charges are asset-based fees the insurer deducts from the separate account. They sit on top of the cost of insurance, administrative fees, and the underlying fund expenses. Together those charges are why an underfunded VUL drains faster than owners expect.
Why did my premium suddenly go up?
In a VUL, the required premium rises when the account value can no longer absorb rising cost-of-insurance charges. Weak subaccount performance and an older insured produce that squeeze together. Request an in-force illustration to see exactly when the policy would lapse at various assumed returns.
Does Auto-Owners Life have to approve a sale?
No. The policy is your property, and the carrier is not a party to your decision to sell it. It records the ownership and beneficiary change once the transaction is complete.
How much can a VUL settlement pay?
Federal GAO research on the market (GAO-10-775) found sellers typically received about 10% to 35% of face value, roughly four to eight times surrender value. On a VUL your surrender comparison should use the current account value, net of any remaining surrender charge.
What if my policy is still in the surrender-charge period?
Then surrendering costs you a penalty on top of taking whatever the market has left you. That generally makes the settlement comparison more favorable, but the only way to know is to run both numbers with current figures.
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Related Reading
- Life Settlement Vs Surrender
- What Is An In Force Illustration
- Is A Life Settlement Worth It
- Education Center
- Sell My Auto Owners Life Universal Life Policy
- Sell My Auto Owners Life Group Life Policy
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.