Can You Sell a Homesteaders Indexed Universal Life Policy? (2026)

How to Tell What You Actually Hold

Five checks, all of which you can do with the paperwork on your kitchen table.

1. Who sold it? If the arrangement was made at a funeral home, it is a pre-need funeral funding policy in nearly every case, whatever anyone called it afterward.
2. Is there a separate funeral goods and services contract? Pre-need arrangements always have two documents: the insurance policy issued by the insurer, and the funeral contract issued by the funeral home listing what will be provided. If a second document exists, you have a pre-need arrangement.
3. Does the specifications page show an index account? Indexed universal life contracts name a crediting method, an index such as the S&P 500, a cap rate, a participation rate, and a floor. If those words do not appear anywhere, the policy is not indexed.
4. Is there a guaranteed cash value table? Whole life has one. Universal life of any kind does not — it has an account value that varies with premiums, credits, and charges.
5. Does the death benefit increase automatically each year? A guaranteed annual increase is characteristic of pre-need funding designed to track funeral inflation, not of indexed universal life.

If checks one through five point to a pre-need whole life contract, the relevant analysis is the final expense and burial policy page or the whole life page rather than this one. As of 2026 we cannot confirm that Homesteaders markets a retail indexed universal life product, and rather than assert a product name that may not exist, the honest position is that your contract is part of a pre-need in-force block until the documents say otherwise.

The Funeral Funding Contract and Why It Usually Cannot Be Sold

In a pre-need arrangement the policy’s death benefit is assigned to a funeral home, which agrees to provide specified goods and services when the time comes. The assignment may be revocable or irrevocable, and which one applies governs everything.

An irrevocable assignment cannot be undone by the owner. The benefit is committed. The policy cannot be sold to a third party, cannot be surrendered for cash, and cannot be redirected to a different funeral home in most states without the current assignee’s cooperation. Irrevocability is deliberate: it is what allows the arrangement to be excluded from countable resources when someone applies for Medicaid.

A revocable assignment leaves more room, but the practical options are still surrender or transfer of the arrangement rather than a sale, because the face amounts involved — typically $5,000 to $25,000 — sit far below the threshold at which any life settlement market operates. Institutional buyers generally start at $100,000 of death benefit because the fixed costs of a purchase, including two independent life expectancy reports, legal review, escrow, and lifetime tracking, do not scale down. See where the practical minimums sit.

Three documents to request, since families usually hold only one:

• The funeral goods and services contract, itemizing what is covered and whether prices are guaranteed against inflation.
• The assignment, stating whether it is revocable.
• The insurance policy itself from the insurer.

Under the FTC’s Funeral Rule, 16 C.F.R. Part 453, funeral providers must give consumers an itemized general price list and may not require the purchase of unwanted items as a condition of buying others. That rule is a useful lever when reviewing what a prearrangement actually covers.

What a Pre-Need Policy Is Really Worth

Rather than asking what a buyer would pay, ask what the arrangement delivers against what it cost. Three figures make that concrete.

The guaranteed goods and services. If the funeral contract guarantees prices, the policy’s real value is protection against decades of funeral inflation. The National Funeral Directors Association’s 2023 general price list study put the median cost of a funeral with viewing and burial at roughly $8,300, excluding cemetery costs, with cremation with viewing and ceremony somewhat lower. A contract that locked prices in 2005 may be worth considerably more than its face amount today.

The growth feature. Many pre-need funding policies include a guaranteed annual increase in death benefit. Ask the carrier what the current death benefit is, not what the original face amount was. Owners are frequently working from a number that is fifteen years stale.

What happens to any excess. If the death benefit exceeds the cost of the services provided, the contract and state law determine whether the surplus goes to the estate, to a named beneficiary, or to the funeral home. This varies by state and by contract, and it is worth knowing in advance.

None of these is a sale, and all three are usually worth more than a sale would have been. If the funeral home has closed or changed hands, contact your state funeral board — pre-need obligations generally transfer with a business sale, and the board maintains records of who assumed them. Pre-need is supervised largely by state funeral boards rather than insurance departments, and trusting and disclosure requirements differ meaningfully from state to state.

What the documents show	What you likely hold	Realistic options
Funeral goods contract plus a policy, benefit grows yearly	Pre-need funeral funding whole life	Confirm price guarantee and assignment; no sale available
Guaranteed cash value table, level face amount	Traditional whole life	Surrender value, reduced paid-up, extended term
Index account, cap and participation rate named	Indexed universal life	In-force illustration; keep, reduce face, surrender, or sell
Account value but no index account	Universal life	Same as above, without the crediting analysis
Certificate rather than policy	Group coverage	Check conversion rights; generally not saleable

If It Is an Indexed Universal Life Policy: How Crediting Works

Suppose the documents show an index account after all, from Homesteaders or another company. Here is what governs the contract’s value.

An IUL does not invest in the stock market. The insurer credits interest based on the movement of an external index — commonly the S&P 500 price return, which excludes dividends — filtered through three carrier-controlled levers.

The cap is the maximum credited rate for the segment. An 8% cap on a 24% index year credits 8%.

The participation rate is the share of index movement counted before the cap applies.

The floor is the minimum, usually 0% or 1%, so a year the index falls 30% credits the floor instead.

The critical point is that caps and participation rates are declared rates, not guaranteed ones. Each contract states a guaranteed minimum cap and a guaranteed minimum participation rate, and those minimums are often far below what was illustrated at sale — a policy sold on a 10% cap may guarantee only 3%. The carrier is entitled to move between them. Ask for the guaranteed minimums in writing and compare them to what is being credited now; the gap is your exposure. Our explainer on how indexed universal life works covers the design in general terms, and whether an IUL can be sold covers the secondary market question.

Why an IUL That Looked Strong Can Be Heading for Lapse

Two forces work against the contract as the insured ages, and they compound.

Cost of insurance. The monthly charge equals the net amount at risk — death benefit minus account value — times a rate that rises with attained age. Mortality rates roughly double every seven to eight years in later life. If the account value has lagged the illustration, the net amount at risk stays large, so a rising rate is applied to a large base. See how the charge is calculated.

Sequence, not average. An illustration at a level 7% assumed smooth compounding. A capped, floored, price-return crediting method produces several 0% years in any realistic sequence, and charges continue during those years. Each flat year leaves the account permanently behind an illustration that kept compounding from a higher base.

Illustration rules changed three times in response to how aggressively these products were sold. Actuarial Guideline 49 was adopted by the NAIC in 2015 with illustration provisions effective September 1, 2015, capping the maximum illustrated crediting rate. AG 49-A followed for illustrations issued on or after November 25, 2020, targeting multiplier and bonus designs. AG 49-B took effect May 1, 2023, addressing proprietary and volatility-controlled indices. A sales illustration from 2011 was produced under rules that no longer exist and is not evidence of anything about the policy today.

One tax note: an IUL funded aggressively in its early years can fail the seven-pay test of Internal Revenue Code section 7702A and become a modified endowment contract, which changes the taxation of loans and withdrawals to a last-in, first-out basis with a possible 10% additional tax before age 59½. That is a question for your own tax advisor.

The Document That Settles It

For any universal life or indexed universal life contract, request an in-force illustration from the servicing carrier in two versions:

1. At current assumptions — current caps, current cost of insurance, current charges — with your present premium continuing. The optimistic case.
2. At guaranteed maximum charges and guaranteed minimum crediting. What the carrier is contractually permitted to do. If this version shows the policy lapsing at age 79, that is a real risk rather than a theoretical one.

Ask in the same letter for the premium required to carry the policy to maturity, the effect of reducing the face amount, the current net cash surrender value after any surrender charge, and the outstanding loan balance with accrued interest. Carriers must provide in-force illustrations on request; expect two to four weeks and sometimes a nominal fee. Our guide to reading one explains what each column means.

With those figures you can rank the real options: keep and fund properly, reduce the face amount to lower the cost of insurance, surrender for cash value, sell if the insured is 65 or older with meaningful impairment and the face amount justifies a transaction, or — worst of all — let it lapse and forfeit everything. The point of gathering the numbers first is that four of those five are usually better than the fifth, and you cannot tell which is best without them.

What Actually Helps a Pre-Need Policyholder

If the documents confirm a pre-need funeral funding contract, here is the productive list.

Confirm the current death benefit, including any guaranteed annual increase. Then compare it to the funeral home’s current general price list for the same services.

Confirm whether prices are guaranteed. A guaranteed-price contract and an unguaranteed one are very different products, and families often assume the former when they hold the latter.

Confirm the assignment status. Revocable arrangements can generally be moved to another funeral home; irrevocable ones usually cannot, though many states permit transferring the arrangement itself between providers.

Check the Medicaid interaction before changing anything. Irrevocable funeral arrangements are generally excluded from countable resources, while cash is not. Converting an excluded arrangement into cash can jeopardize eligibility, and transfers for less than fair market value raise separate look-back issues. Review it with an elder law attorney or your state Medicaid agency — our overview of how life insurance counts as a Medicaid asset sets out the framework.

Review the beneficiary and any excess-proceeds provision. This is where families are most often surprised.

A free policy review at Pine Lake Life Solutions can be done from the policy cover page and the funeral contract, costs nothing, and will tell you plainly when no secondary market exists at that face amount — which for pre-need coverage is nearly always the case. The general rules for small-face coverage are covered on our page about selling a final expense policy.

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Frequently Asked Questions

Can I cash in a pre-need funeral policy?

Usually not if the assignment to the funeral home is irrevocable, which is common because irrevocability is what allows the arrangement to be excluded from countable resources for Medicaid. If the assignment is revocable, surrender may be possible but will end the funeral arrangement. Request the assignment document and read whether it says revocable or irrevocable before making plans.

The funeral home that sold me the policy closed. What happens?

Pre-need obligations generally transfer when a funeral home is sold, and your state funeral board maintains records of who assumed them. Contact the board rather than the insurer first, since the funeral contract and the insurance policy are separate agreements. The insurer can confirm the policy status and current death benefit independently of who provides the services.

How do I know if my policy is indexed universal life?

The specifications page will name a crediting method, an index such as the S&P 500, and a cap rate, participation rate, or floor. If none of those terms appear anywhere in the contract, the policy is not indexed. A guaranteed cash value table instead indicates whole life, and an account value without an index indicates ordinary universal life.

My cap rate dropped. Can the company do that?

Generally yes, within the contract terms. Caps and participation rates are declared periodically by the insurer subject to a guaranteed minimum written into the policy, and that minimum is often far below what was illustrated at sale. Request the guaranteed minimums in writing and compare them against current declared rates to see how much further they could fall.

Is a $10,000 funeral policy ever sellable?

In practice, no. Institutional buyers generally start around $100,000 of face amount because the fixed costs of a transaction, including two life expectancy reports, legal review, escrow, and lifetime tracking, cost roughly the same regardless of policy size. Anyone offering to buy a small burial policy should have their state license verified independently before you share anything.

Will surrendering a funeral policy affect Medicaid eligibility?

It can. Irrevocable funeral arrangements are generally excluded from countable resources, while cash is countable, so converting one to the other may affect eligibility. Transfers for less than fair market value raise separate look-back questions. Review any change with an elder law attorney or your state Medicaid agency before acting, since rules and thresholds vary by state.

Related Reading

• What Is Indexed Universal Life
• Can I Sell An Indexed Universal Life Policy
• What Is An In Force Illustration
• What Is Cost Of Insurance
• Can I Sell A Final Expense Policy
• Minimum Policy Size For A Life Settlement
• Life Insurance Counts Medicaid Asset
• Sell My Homesteaders Final Expense Policy
• Sell My Homesteaders Whole Life Policy

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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.