Yes — a Colonial Life universal life policy can be sold through a life settlement when the policyholder and the policy qualify, because the buyer is purchasing the contract and the carrier’s consent is not part of the equation. Colonial Life is not a party to the decision and has no vote in it.
Universal life is, industry-wide, the single most common policy type to appear in the secondary market. The reason is structural. UL is a flexible-premium contract in which your payments and interest credits go into an account value, and monthly charges — chiefly the cost of insurance — come back out. Those charges rise steeply with age. Policies issued in the 1980s through the 2000s were often illustrated at 8% to 12% interest and have spent years crediting close to their guaranteed minimum instead, so the account value drains and premiums balloon in the insured’s 70s and 80s.
Colonial Life & Accident Insurance Company, of Columbia, South Carolina, is Unum’s voluntary-benefits brand and sells primarily at the worksite, so the size and structure of any UL coverage it wrote should be confirmed on your own contract. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Colonial Life or Unum.
In This Article
- First, Confirm What You Own
- How Universal Life Actually Works Under the Hood
- The In-Force Illustration Is the Whole Story
- Why UL Prices Well in the Secondary Market
- Warning Signs Your UL Policy Needs Attention Now
- Documents and the Order to Get Them
- How Long It Takes, and What Happens at Closing
- Weigh the Alternatives Honestly
- Frequently Asked Questions
First, Confirm What You Own
Colonial Life’s core business is voluntary worksite coverage — accident, disability, critical illness, hospital indemnity — sold through independent contracted agents at employee benefit fairs. Its life lineup has historically leaned toward term and whole life certificates with portability rather than large individual universal life contracts.
So step one is verification. Pull the contract and look for the words “universal life,” a specified amount, a planned premium, and an account or accumulation value. If instead you see a level premium with a guaranteed cash value table, you have whole life. If you see a term period and no cash value, you have term. As of 2026, product availability varies by state and by employer plan, so confirm the exact product name and the servicing phone number on your billing notice rather than assuming from the brand.
How Universal Life Actually Works Under the Hood
Think of UL as a bucket. Premiums go in. Interest is credited at the current rate, which cannot fall below the contract’s guaranteed minimum. Every month the carrier withdraws the cost of insurance for that month, plus administrative and rider charges.
When you are 45, the cost of insurance is small. When you are 82, it can be enormous, because it is priced against the odds of a claim in the coming year. If the account value cannot cover the monthly deduction, the policy enters a grace period and then lapses — even though you may have paid faithfully for decades. That is the trap that drives so many UL owners to the secondary market: the alternative to selling is often watching a large death benefit disappear for nothing.
The In-Force Illustration Is the Whole Story
There is one document that tells you where a UL policy is headed, and you are entitled to request it: the in-force illustration. Ask the servicing company for two versions.
- Current assumptions. Projects values using today’s crediting rate and current charges. This is the optimistic view.
- Guaranteed assumptions. Projects using the minimum crediting rate and maximum allowable charges. This is the worst legal case, and it is the one that reveals the earliest possible lapse date.
Also ask for a projection showing the premium required to carry the policy to age 100 or to maturity. The gap between what you are paying now and that number is the single best measure of the problem. Our guide to reading an in-force illustration explains each column.
Why UL Prices Well in the Secondary Market
Buyers value a policy on three things: the death benefit they will eventually collect, the premiums they must pay to keep it in force until then, and the estimated life expectancy of the insured. Universal life scores well because it is flexible — a buyer can often fund it at a minimum level rather than at the original planned premium, which lowers their carrying cost and raises what they can pay you.
Published market research, including the GAO’s study of the industry (GAO-10-775), found sellers commonly received on the order of 10% to 35% of face value, and multiples of what surrendering would have paid — frequently in the range of four to eight times cash surrender value. On a UL policy that is running out of account value, surrender value may be near zero, which makes the comparison stark. See how offers are estimated for more.
| Illustration scenario | What it assumes | Why it matters to a buyer |
|---|---|---|
| Current assumptions | Today’s crediting rate and current charges | Best-case funding path; the rosiest lapse date |
| Guaranteed assumptions | Minimum interest, maximum allowable charges | Shows the earliest legal lapse date, the risk case |
| Premium to carry to age 100 | Funding required to avoid lapse | Sets the buyer’s ongoing carrying cost |
| Minimum premium to maintain | Least payment that keeps coverage alive | Lower carrying cost can mean a higher offer |
| Current surrender value | What the carrier pays if you cancel today | The floor any offer must beat |
Warning Signs Your UL Policy Needs Attention Now
Do not wait for the lapse notice. Act if you see any of these:
- A letter saying additional premium is required to keep coverage in force.
- An account value that has fallen year over year even though you kept paying.
- A billed premium that has increased, or a request for a lump-sum catch-up payment.
- An in-force illustration showing lapse before your late 80s or 90s.
- A surrender-charge schedule that has already expired, meaning the policy is older than it feels.
A policy in a grace period is far harder to transact than a policy that is comfortably in force, because the buyer inherits an immediate funding problem and the timeline may not allow for underwriting.
Documents and the Order to Get Them
Start with the policy cover page — insurer, policy number, face amount, issue date. That alone tells a reviewer whether the policy clears the general $100,000 threshold buyers work with.
Then the most recent annual statement, showing account value, surrender value, current cost-of-insurance charges and any loans. Then the in-force illustration described above. Finally, a HIPAA authorization so a life-expectancy estimate can be prepared from medical records — read it, keep a copy, and make sure it is specific and revocable.
How Long It Takes, and What Happens at Closing
Expect roughly 60 to 120 days from start to funding. The review is quick. The in-force illustration typically takes days to a few weeks depending on the service center. Medical records are the bottleneck. Offers should always come in writing, with gross and net figures if a broker is in the chain.
At closing, funds go into an independent escrow account first. Only then are ownership and beneficiary changes submitted to the carrier. When the carrier confirms the change, escrow releases the money. Most states also provide a rescission window after funding, during which a seller may unwind the transaction by returning the proceeds. Never transfer ownership before the money is secured in escrow.
Weigh the Alternatives Honestly
Selling is not automatically right. If the coverage is still needed and the premium is affordable, keep it. If the policy is overfunded, reducing the face amount may fix the premium problem. If the account value is meaningful, surrender is available — though it usually pays the least of the options that pay anything. And a partial approach, where you keep some death benefit and shed the premium, exists too; see the policy options overview and whether a settlement is worth it.
This page is education, not legal, tax or investment advice; consult your own advisors on the tax treatment of any proceeds. For a free policy review, send the policy cover page or call (305) 209-7183. Related guides: whole life and guaranteed universal life.
Frequently Asked Questions
Why is universal life so common in life settlements?
Because its internal cost of insurance rises with age while many older policies credit interest far below what they were originally illustrated at. Premiums climb sharply in the insured’s 70s and 80s, and selling is often better than lapsing a large death benefit for nothing.
Do I need Colonial Life’s permission to sell?
No. The buyer purchases the contract from you as owner; the carrier is not a party to the decision and cannot block it. Colonial Life simply processes the ownership and beneficiary change after closing.
What is an in-force illustration and how do I get one?
It is a carrier-generated projection of your policy’s future values, premiums and lapse date. You request it from the servicing company, usually by phone or written request, and you can ask for both current and guaranteed-assumption versions. Allow a few days to a few weeks.
My UL policy has almost no cash value. Is it worthless?
Not necessarily. Buyers price a policy on its death benefit, the premiums needed to keep it in force, and life expectancy, not on cash value. A policy with little surrender value can still draw an offer, and in that situation selling is often the only way to recover anything.
How much of the face amount might I receive?
There is no fixed percentage. GAO research on the market (GAO-10-775) found sellers commonly received roughly 10% to 35% of face value, often several times surrender value. Your figure depends on age, health, face amount and the premium a buyer would have to pay.
What if my policy is already in a grace period?
Move fast and tell everyone involved immediately. A policy in grace can sometimes still be transacted, but the timeline is compressed and a buyer may need to fund a payment to keep coverage alive. Some deals simply cannot be completed in time.
Should I stop paying premiums while I explore a sale?
No. Coverage must stay in force through closing or there is nothing to sell. Keep paying until the transaction funds and the carrier confirms the ownership change.
What do I need to send first?
Only the policy cover page, the first page showing insurer, policy number, face amount and issue date. That is enough for a free policy review; call (305) 209-7183 with any questions.
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
- What Is An In Force Illustration
- How Much Can I Get For My Life Insurance Policy
- How It Works Policy Options
- Is A Life Settlement Worth It
- Sell My Colonial Life Whole Life Policy
- Sell My Colonial Life Guaranteed Universal 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.