Yes — a survivorship, or second-to-die, life insurance policy can be sold in a life settlement when the owner and the policy qualify, and the insurance company’s permission is not required. But before that general rule helps you, there is a Homesteaders-specific question that decides almost every case: is your policy a preneed funeral funding contract? If it is, the answer is very likely no, and for reasons that have nothing to do with your right to sell.
Homesteaders Life Company is a mutual insurer headquartered in West Des Moines, Iowa that specializes in funding prearranged funerals. Its policies are typically small, are sold through funeral homes rather than financial advisors, and are commonly assigned — often irrevocably — to the funeral home that will perform the services. Three features of that structure each independently block a life settlement: the face amount is far below the market’s practical floor, the policy owner may have already given up the ability to redirect the benefit, and the contract is tied to a service agreement rather than to an estate-planning need. Confirm the assignment status and ownership of your specific policy with the carrier and the funeral home as of 2026 — preneed rules also vary considerably by state.
This page explains where survivorship coverage fits, why preneed contracts sit outside the settlement market, how joint mortality is priced when a genuine second-to-die policy exists, and what to do instead when a preneed policy no longer matches your plans. Pine Lake Life Solutions is not affiliated with Homesteaders Life Company, and this is education, not legal or tax advice.
In This Article
- Preneed Funeral Policies Are a Different Instrument
- The Face Amount Problem
- If You Actually Hold a Second-to-Die Contract
- How Buyers Price Joint Mortality
- First Death, Trust Ownership, and Who Signs
- Contestability, State Waiting Periods, and Escrow
- What to Do Instead With a Preneed Policy
- Frequently Asked Questions
Preneed Funeral Policies Are a Different Instrument
A preneed policy exists to fund a specific funeral. The purchaser signs a goods-and-services agreement with a funeral home, and an insurance policy is issued to pay for those items when the time comes. In many arrangements the policy is assigned to the funeral home, and in states where irrevocable assignment is used — often to allow the value to be excluded when qualifying for Medicaid — the owner has deliberately surrendered the right to change the arrangement.
That last point is the crux. A life settlement requires the owner to transfer ownership and beneficiary rights to a buyer. If those rights have been irrevocably assigned to a funeral provider, there is nothing left to sell. And even where the assignment is revocable, unwinding it can undo an eligibility position the family arranged on purpose.
Before anything else, determine three facts: who is the legal owner of record, whether an assignment exists and whether it is revocable, and what the face amount is. Ask the carrier for the ownership record and ask the funeral home for the goods-and-services agreement. Preneed statutes differ substantially from state to state, so confirm your state’s treatment as of 2026 rather than assuming a general rule applies.
The Face Amount Problem
Even setting assignments aside, size alone rules out preneed contracts. Life settlement buyers carry fixed costs on every transaction: medical record retrieval, life expectancy reports, legal review, escrow, and carrier processing. On a survivorship file those costs roughly double, since two insureds must be underwritten. Because the expense does not scale down, the market has a practical floor around $100,000 of death benefit.
Preneed policies are sized to a funeral, not to an estate. A contract written to cover a casket, services, and a burial plot lands well below that threshold. No amount of shopping the file changes the arithmetic; providers will not bid.
This is worth hearing clearly because the alternative — surrendering a small policy for its cash value — is usually the worst available option. The death benefit on a preneed contract is typically far larger than any surrender figure, and surrendering it means the funeral has to be paid for from other assets at the worst possible moment. See surrender versus sell for the comparison, and how life insurance counts as a Medicaid asset if eligibility is part of the picture.
If You Actually Hold a Second-to-Die Contract
Some households hold a preneed policy alongside a genuine estate-planning survivorship contract from a different insurer, and the two end up in the same folder. If a policy in your file states that the death benefit is payable at the death of the last surviving insured, carries a face amount of $100,000 or more, and is not assigned to a service provider, the settlement analysis becomes real.
Verify from the cover page: the legal name of the issuing company, the product or form number, the face amount, the issue date, and the payout trigger language. Joint first-to-die coverage pays at the first death and prices on a completely different basis. Then confirm the current owner and beneficiary of record, the outstanding loan balance, and the premium with the servicing carrier.
Those items determine whether a review is worth the effort. If you are new to the concept, start with what a life settlement is and how the eligibility review works.
| Policy Characteristic | Preneed Funeral Policy | Estate-Planning Survivorship Policy |
|---|---|---|
| Typical face amount | Sized to a funeral — well under $100,000 | $100,000 to several million |
| Who owns it | Often assigned to a funeral home | An individual or an irrevocable trust |
| Can ownership be transferred? | Frequently no — irrevocable assignment | Yes, by the owner or trustee |
| Sold through | Funeral homes | Advisors and estate planning attorneys |
| Settlement market interest | None | Possible if both insureds are seniors |
| Better path if unwanted | Revise the goods-and-services agreement | Free policy review comparing all exits |
How Buyers Price Joint Mortality
A settlement buyer assumes the premium obligation and receives the death benefit whenever it eventually pays, so their return hinges on how long the wait is. Estimating the payout date is the entire pricing exercise.
Single-life coverage requires one life expectancy report. Survivorship coverage requires two, plus a joint model estimating the timing of the second death. That later death is determined by whichever insured lives longer, so the joint estimate exceeds either individual projection — sometimes by many years when one spouse is healthy for their age. Owners are often startled that a serious diagnosis on one insured barely moves the number.
The consequences are a longer projected premium stream, a lower present value, and a shorter list of bidders, because joint mortality is a specialized appetite. Against the GAO’s market benchmark (GAO-10-775), where typical sellers received roughly 10% to 35% of face value and commonly several times cash surrender value, survivorship files land toward the lower end. Background at life expectancy underwriting.
First Death, Trust Ownership, and Who Signs
Two structural issues shape most genuine survivorship transactions. The first is the death of one insured. Afterward the contract prices like single-life coverage on the survivor: one medical file, one life expectancy report, one premium stream. Policies that drew no interest while both insureds were living often become viable at that point, even as the family’s need for the coverage typically shrinks once the first estate has been administered.
The second is trust ownership. Large survivorship policies are frequently held by an irrevocable life insurance trust, and where that is true the trust is the seller. The trustee signs the application and the assignment of ownership, and proceeds go to the trust for distribution under its terms. Buyer’s counsel will confirm the trustee’s authority to sell trust property, the validity of the appointment, and any required beneficiary consents. Missing successor-trustee documentation is the most common delay.
Keep the Crummey notice history with the trust document; premiums funded by annual exclusion gifts should be supported by withdrawal-right notices to beneficiaries. Buyers do not audit them, but the file closes faster when the record is complete. See selling a trust-owned policy and what a first death changes.
Contestability, State Waiting Periods, and Escrow
Contestability runs for two years after issue. During that window an insurer may investigate the application and rescind for material misrepresentation, and buyers will not purchase a contestable policy because the benefit remains challengeable. Separately, most states require a minimum holding period before any policy can be sold, generally two years, with exceptions where an insured is terminally or chronically ill. These rules are state-specific and periodically revised, so confirm the current requirement where you live as of 2026.
A completed transaction typically runs 60 to 120 days. Records retrieval and two life expectancy reports consume most of that time, with carrier processing of the ownership change at the end. Funds should be held by an independent escrow agent and released only after the insurer confirms the transfer, and most states provide a rescission window after funding.
Never sign an ownership assignment against a promise of later payment, and get every offer in writing with gross and net-of-commission figures shown. Red flags are listed here.
What to Do Instead With a Preneed Policy
If your Homesteaders policy is a preneed contract, the productive questions are different ones. Are you moving to another state, and will the funeral home you selected still be the provider? Preneed portability varies, and some contracts can be transferred to another funeral home within a network while others cannot. Ask the funeral home and the carrier directly.
Is the arrangement irrevocably assigned because of a Medicaid eligibility strategy? If so, undoing it may reverse the exclusion the family established, which is a decision for an elder law attorney rather than an insurance conversation. See how a Medicaid spend-down works and the lookback period considerations for context before acting.
Is the premium still due, or is the policy paid up? Many preneed contracts are funded over a short pay period and then paid up entirely, at which point there is no ongoing cost and no reason to disturb the arrangement. If the coverage no longer matches your wishes, ask about changing the goods-and-services agreement rather than the policy.
If you do hold a survivorship contract with a face amount of $100,000 or more that no longer serves a purpose, send the policy cover page for a free policy review, or call (305) 209-7183. Pine Lake Life Solutions provides education and free policy reviews only; it is not affiliated with Homesteaders Life Company and does not give legal, tax, or investment advice. Other Homesteaders contracts are discussed at whole life and universal life.
Frequently Asked Questions
Can a preneed funeral policy be sold in a life settlement?
Almost never. These contracts are small, are usually assigned to the funeral home that will provide the services, and are frequently assigned irrevocably. Where ownership rights have been given up, there is nothing left to transfer to a buyer, and the face amount would be far below the market’s practical floor regardless.
What is Homesteaders Life Company known for?
Homesteaders is a mutual insurer based in West Des Moines, Iowa that specializes in insurance funding for prearranged funerals, distributed through funeral homes rather than financial advisors. That product focus is why most Homesteaders contracts fall outside the life settlement market.
Should I surrender a small preneed policy for cash instead?
Usually not. The death benefit is typically much larger than any surrender value, and surrendering means the funeral must be paid from other assets later. If an irrevocable assignment supports a Medicaid eligibility position, unwinding it can have consequences you should review with an elder law attorney first.
How do I find out whether my policy is assigned?
Ask the carrier for the current owner and assignee of record, and ask the funeral home for a copy of the goods-and-services agreement. Whether an assignment is revocable depends on the document and on state preneed law, which varies considerably. Confirm both as of 2026.
Why do survivorship policies receive lower offers than single-life ones?
The benefit pays only after both insureds die, so the expected holding period is driven by whoever lives longer, meaning more premiums and a lower present value. Fewer buyers price joint mortality, so there is also less competition for the file.
Does one insured’s serious illness make a joint policy valuable?
Less than owners expect. The joint model is dominated by the healthier life because the payout waits for the second death. Files where both insureds have meaningful impairments are the ones that attract genuine bids.
Who signs if a trust owns a survivorship policy?
The trustee signs the application and the ownership transfer, and the trust receives the proceeds for distribution under its terms. A buyer’s counsel reviews the trust to confirm the trustee’s authority and appointment. Successor-trustee documentation gaps are the most common cause of delay.
How long does a life settlement take?
Generally 60 to 120 days from application to funded payment. Medical records and life expectancy reports take the longest, followed by the carrier’s ownership-change processing. Funds are held by an independent escrow agent and released only after the insurer confirms the transfer.
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Related Reading
- Surrender Vs Sell Policy
- Life Insurance Counts Medicaid Asset
- What Is A Life Settlement
- Stage 1 Policy Eligibility Review Explained
- What Is Life Expectancy Underwriting
- Sell Ilit Trust Owned Policy
- Survivorship Policy First Death
- Life Settlement Scams Red Flags
- Nursing Home Medicaid Spend Down
- Medicaid Lookback Selling 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.