Yes — a Bankers Life variable universal life policy can be sold in a life settlement when you and the policy qualify, and the insurer’s permission plays no part in it; the buyer purchases the contract directly from you. The investment subaccounts inside a VUL make the policy feel more complicated than other coverage, but they do not change the basic legal fact that the contract is property you own and may transfer.
What the subaccounts do change is how the policy should be evaluated. In a VUL, your cash value is invested in separate-account subaccounts that behave like mutual funds. The surrender value printed on a statement dated in March is not the surrender value in September. Meanwhile the policy charges mortality and expense risk fees, administrative fees, and a monthly cost of insurance that climbs with the insured’s age — and those charges are deducted from the same account that the market is moving up and down.
This guide explains the fee stack, why an underfunded VUL can unravel quickly in an insured’s 70s or 80s, and why a settlement buyer’s offer is anchored to the death benefit rather than the fund balance. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Bankers Life and Casualty Company or CNO Financial Group. This page is education, not legal, tax, or investment advice.
In This Article
- Your Surrender Value Is a Moving Target
- The Fee Stack Inside a Variable Policy
- How an Underfunded VUL Comes Apart
- Why Buyers Look Past the Subaccount Balance
- Requesting the Right Illustration for a VUL
- Bankers Life, CNO, and the Face-Amount Screen
- Extra Paperwork, Timing, and How to Start
- Frequently Asked Questions
Your Surrender Value Is a Moving Target
With whole life, the cash surrender value follows a contractual schedule you can look up. With guaranteed universal life, it is close to zero by design. With VUL, it is whatever the subaccounts happen to be worth today, minus any surrender charge still in effect.
That has a practical consequence when you are comparing options. If you ask “is a settlement better than surrendering,” the surrender number on the other side of that comparison is not fixed. It moved last month and it will move next month. A settlement offer, by contrast, is a stated dollar figure with an expiration date attached.
Also check whether a surrender charge still applies. Many VUL contracts impose declining surrender charges over the first decade or more, which can make the amount you would actually receive meaningfully lower than the account value shown on the statement. Our explainer on cash surrender value covers the difference between account value and what you would actually be paid.
The Fee Stack Inside a Variable Policy
A VUL carries more layers of cost than most owners realize:
- Mortality and expense risk (M&E) charges, assessed against separate-account assets to compensate the insurer for guarantees and expenses.
- Subaccount fund management fees, charged inside each investment option, on top of the M&E.
- Monthly cost of insurance, based on the net amount at risk and the insured’s attained age — the charge that grows fastest in later years.
- Policy administration and premium load charges, often a flat monthly fee plus a percentage of each premium.
In good market years these charges are absorbed by investment gains and nobody notices. In flat or down years they come straight out of principal. The combination of falling account value and rising cost of insurance is what turns a VUL from a comfortable asset into a policy that needs money.
How an Underfunded VUL Comes Apart
The failure pattern is consistent enough to describe. The policy is funded at a level that a strong illustrated return would have supported. Returns come in lower. The account value grows slowly or shrinks. As the insured moves into the 70s, the monthly cost of insurance rises steeply because it is charged on the net amount at risk — the gap between the death benefit and the account value — and that gap is widening.
Each month the charges pull more from an account that is not replenishing. Eventually the carrier sends a notice: the policy will lapse unless a substantial payment is made. Owners in this position are often asked for far more than they have ever paid annually.
Watch for the early signals: a shrinking account value in years when the market rose, a growing net amount at risk, and any language in your annual statement about the policy failing to sustain itself. If you see them, request an in-force illustration before deciding anything.
| What Your Statement Shows | What a Buyer Focuses On | Why the Difference |
|---|---|---|
| Subaccount balances by fund | Death benefit amount | The payout is what the buyer eventually collects |
| Year-to-date investment return | Estimated life expectancy | Timing of the payout drives present value |
| Current cash surrender value | Premium needed to keep the policy in force | Carrying cost is the buyer’s ongoing expense |
| M&E and fund expense ratios | Net amount at risk trend | A widening gap signals rising internal charges |
| Loan balance, if any | Loan balance, if any | Both agree here — loans reduce net proceeds |
Why Buyers Look Past the Subaccount Balance
A settlement buyer is not buying your investment portfolio. When the policy transfers, the buyer will typically reallocate or restructure the funding anyway. What the buyer is acquiring is the insurer’s obligation to pay a death benefit, and what the buyer is taking on is the cost of keeping that obligation alive.
So the pricing inputs are: the death benefit, the insured’s estimated life expectancy from independent medical underwriting, and the projected premium load needed to carry the policy. Account value matters mostly in two indirect ways — it sets the surrender floor an offer should beat, and a healthy account value reduces near-term carrying cost.
The federal GAO’s study of the market (GAO-10-775) found sellers typically received about 10% to 35% of face value, on the order of four to eight times cash surrender value. For an underfunded VUL where the account value has been eroded, that multiple comparison can look dramatic — but the dollar amount still depends on the same inputs as any other policy. See how offers are determined.
Requesting the Right Illustration for a VUL
Ask the service center for an in-force illustration and specify the assumptions, because with a variable contract the default is often a flattering one. Request at minimum:
- A projection at a low assumed gross return — 0% and 4% are useful stress tests — showing when the policy lapses.
- A projection at the current allocation’s assumed rate.
- The premium required to carry the policy to age 100 at each of those return assumptions.
The spread between the 0% run and the optimistic run is the honest measure of how much risk you are carrying. As of 2026, confirm with the carrier which scenarios its illustration system will produce for your specific product. Read what an in-force illustration is before the call so you know what to ask for.
Bankers Life, CNO, and the Face-Amount Screen
Bankers Life and Casualty Company, founded in 1879 and based in Chicago, has been part of the group now called CNO Financial Group since the 1990s; CNO carried the Conseco name until renaming in 2010. Bankers Life reaches middle-income retirees through a captive career agency force, with a product mix weighted toward Medicare supplement, long-term care, annuities, and life insurance. A.M. Best has rated the company in the “A-” (Excellent) range in recent years; verify the current 2026 rating with A.M. Best or the carrier.
Variable products are less central to that retiree-focused mix than fixed products are, and face amounts across the book often sit below the level where a settlement makes economic sense. Buyers generally look for $100,000 or more in death benefit because transaction costs do not scale down. If your VUL is below that, be skeptical of anyone who tells you otherwise, and look instead at reducing coverage, adjusting the funding, or simply keeping the policy if it still serves a purpose.
Extra Paperwork, Timing, and How to Start
Variable contracts add a few documents to the file. Expect the annual statement showing account value by subaccount, any surrender charge schedule still in effect, and confirmation of loans or withdrawals — which reduce both the death benefit and your net proceeds. Because VUL is a registered security product, the sale may also involve additional disclosure or a licensed intermediary depending on the parties involved.
Overall timing runs about 60 to 120 days from initial review to funded payment, with medical records the usual bottleneck. Keep paying premiums throughout; an underfunded VUL can deteriorate quickly, and a lapse mid-process ends the transaction.
Get an offer in writing, ask for the number net of every commission and fee, insist that funds sit with an independent escrow agent until the carrier confirms the ownership change, and note the rescission window most states provide afterward. To begin, send the policy cover page for a free, no-obligation review or call (305) 209-7183. See also how the policy options work and our guide to Bankers Life guaranteed universal life.
Frequently Asked Questions
Can a variable universal life policy be sold like any other policy?
Yes. A VUL is a contract you own, and the owner’s right to transfer a life insurance policy was confirmed by the Supreme Court in Grigsby v. Russell in 1911. The investment subaccounts add complexity to valuation and paperwork but do not change your right to sell. The carrier’s permission is not required.
Will a strong market year increase my settlement offer?
Not directly. A higher account value can slightly reduce a buyer’s near-term carrying cost and it raises the surrender value an offer should beat, but offers are anchored to the death benefit and the insured’s estimated life expectancy. Buyers are not purchasing your fund performance.
What are M&E charges and why do they matter?
Mortality and expense risk charges are fees assessed against separate-account assets to compensate the insurer for the guarantees and expenses it carries. They sit on top of the underlying fund management fees and the monthly cost of insurance. In flat markets these layered charges come out of principal.
Why does my cost of insurance keep rising?
It is charged on the net amount at risk, which is the difference between the death benefit and the account value, and it is priced by the insured’s attained age. As the account value erodes and the insured ages, both factors push the charge higher, which is how underfunded VUL policies unravel in the 70s and 80s.
Should I move my subaccounts to cash before selling?
That is an investment decision and this page does not give investment advice. Discuss it with your own licensed advisor, and understand that a buyer’s offer is based on the death benefit and carrying cost rather than the allocation. Do not make changes that could jeopardize the policy staying in force.
Is there a surrender charge on my VUL?
Many VUL contracts apply declining surrender charges over the first decade or longer, which means the amount you would actually receive on surrender is less than the account value shown. Ask the carrier for your current surrender charge schedule so you are comparing real numbers.
Does a policy loan affect the sale?
Yes. An outstanding loan and its accrued interest are deducted from what you receive at closing because the buyer takes the policy subject to the loan. Loans also reduce the death benefit. Get the current balance from your annual statement before starting a review.
Is Pine Lake affiliated with Bankers Life?
No. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Bankers Life and Casualty Company or CNO Financial Group. We offer education and a free policy review; send the policy cover page or call (305) 209-7183 to see whether your policy is a candidate.
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Related Reading
- Cash Surrender Value Life Insurance
- How Much Can I Get For My Life Insurance Policy
- What Is An In Force Illustration
- How It Works Policy Options
- Sell My Bankers Life Guaranteed Universal Policy
- Sell My Bankers Life Universal 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.