Yes – a universal life policy can be sold in a life settlement if the policyholder and the policy qualify; the buyer purchases the contract, the carrier’s permission is not required, and the insurance company is not a party to your decision. Universal life is in fact the policy type that shows up most often in the secondary market.
Before you go further, though, verify what you own. Homesteaders Life Company is a mutual insurer in West Des Moines, Iowa that writes almost exclusively pre-need funeral insurance sold through funeral homes – typically small-face whole life assigned to fund a specific funeral. Genuine individual universal life is not what that company is known for. If your paperwork says universal life, it may be a different carrier’s contract sitting in the same file, or a pre-need product with a name you have misremembered. As of 2026, confirm the product type and the issuing company with the carrier before you do anything else.
This guide covers both branches: how to identify what you hold, and how universal life is valued when you do hold it. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Homesteaders Life Company. Education only – not legal, tax or investment advice.
In This Article
- Step One: Identify the Product on the Cover Page
- If It Is Pre-Need, Say So Early
- Why Universal Life Ends Up in the Settlement Market
- The Two Illustrations That Tell You the Truth
- How a Buyer Prices Universal Life
- Documents, Process and Timing
- Deciding: Sell, Surrender, or Keep Paying
- Frequently Asked Questions
Step One: Identify the Product on the Cover Page
The first page of any policy names the issuing company, the policy number, the face amount, the issue date and the product. Read those five lines before anything else.
Signals that you are holding pre-need funeral coverage rather than individual universal life: a face amount under about $25,000, a funeral home named anywhere on the document, a benefit described as growing to match funeral goods and services, or premiums paid over a short period such as three, five or ten years. Signals that you have true universal life: a flexible premium, an account value with a declared interest rate, a monthly cost-of-insurance deduction, and a face amount that has nothing to do with a funeral.
If you cannot tell, call the policyholder service number and ask directly: what product is this, who issued it, and what is the current death benefit?
If It Is Pre-Need, Say So Early
Pre-need funeral policies almost never qualify for a settlement, for two reasons that have nothing to do with the company’s quality. They are small – settlement buyers carry fixed underwriting, legal and escrow costs, so Pine Lake reviews policies with a death benefit of $100,000 or more – and they are frequently assigned to a funeral home, sometimes irrevocably, which means ownership cannot be transferred.
An irrevocable assignment is often intentional, because it is what allows a prepaid funeral to be treated as an exempt asset under state Medicaid eligibility rules. Unwinding it is usually impossible and sometimes unwise. If that is your situation, the honest answer is no, and the better questions are whether to keep the policy as-is and whether any larger policy exists elsewhere in the family files.
Why Universal Life Ends Up in the Settlement Market
When the policy really is universal life, the reason it becomes a candidate is almost always the same story. Contracts sold in the 1980s, 1990s and early 2000s were illustrated at crediting rates of 8% to 12%. Interest rates fell and stayed low for a long stretch, and many of those policies spent years crediting at or near their contractual guaranteed minimum, commonly in the 2% to 4% range.
At the same time, the cost of insurance deducted each month is age-banded and rises steeply once the insured reaches their seventies and eighties. Slower growth plus faster charges drains the account value. Eventually the owner receives a notice demanding a much larger premium to keep the policy in force – often at the exact age when income is fixed and the coverage is least affordable.
That letter is what sends most universal life owners looking for options, and it is why the product dominates the secondary market.
| What You See on the Documents | Likely Product | Settlement Outlook |
|---|---|---|
| Funeral home named as beneficiary or assignee | Pre-need funeral policy | Generally not sellable |
| Face amount under $25,000 | Pre-need or final expense | Below the market threshold |
| Benefit grows with funeral goods and services | Pre-need growth policy | Not a settlement candidate |
| Flexible premium with an account value and declared rate | True universal life | Worth a review at $100,000 or more |
| Monthly cost-of-insurance deduction shown on statement | Universal life mechanics | Request in-force illustrations |
| Notice demanding a much larger premium | Underfunded universal life | Review promptly – lapse risk is real |
The Two Illustrations That Tell You the Truth
Request an in-force illustration from the issuing company at two sets of assumptions:
- Current assumptions – today’s crediting rate and today’s charges, carried forward.
- Guaranteed assumptions – the minimum interest and maximum charges the contract permits.
Compare the projected lapse dates. The guaranteed run is usually years earlier, and the gap between them is the amount of risk you are personally carrying. Also ask for a run solving for the premium needed to carry the policy to age 100. Requests are typically free and take one to three weeks. Our guide to reading an in-force illustration walks through each column.
How a Buyer Prices Universal Life
Three inputs, in order of importance: the death benefit, the premium stream needed to keep the contract alive, and the insured’s life expectancy based on medical records. The account value matters only as a cushion that delays the next premium.
That is why a universal life policy with a nearly empty account value can still draw a solid offer, while a policy with a healthy balance and brutal internal charges may draw none. The GAO’s study of the market (GAO-10-775) reported sellers typically received about 10% to 35% of face value, roughly four to eight times cash surrender value. Those are documented ranges from qualifying policies, not a quote – see how much a policy can bring.
Documents, Process and Timing
To start a free review, all you send is the policy cover page. If it moves forward, the file adds the latest annual statement, both in-force illustrations, a HIPAA authorization for life expectancy underwriting, photo ID, and trust documents if a trust owns the policy.
Expect roughly 60 to 120 days end to end – a few days to screen, two to four weeks for documents and records, a couple of weeks for underwriting and offers, then contracts, escrow and the carrier’s ownership change. Keep paying premiums the entire time. Your money should be held by an independent escrow agent and released only when the insurer confirms the transfer, and most states give you a rescission window afterward.
Deciding: Sell, Surrender, or Keep Paying
Surrender pays the cash surrender value and ends the coverage. Lapse pays nothing. A settlement converts the policy to a lump sum today. There is also a middle path on some transactions where you keep a portion of the death benefit and stop paying premiums entirely – compare them in how the policy options work and settlement versus surrender.
Keep the policy when heirs depend on it and the premium is manageable. Consider selling when the reason for the coverage has ended, the premium has become a burden, or the projected lapse date is approaching and the realistic alternative is losing everything. Proceeds can have tax consequences; ask your own CPA or attorney. To find out where your policy stands, send the cover page for a free, no-obligation review or call (305) 209-7183.
Frequently Asked Questions
Does Homesteaders Life write universal life policies?
Homesteaders Life Company is known primarily for pre-need funeral insurance sold through funeral homes, which is usually small-face whole life. If your documents say universal life, confirm the product and issuing company with the carrier as of 2026 – it may be another company’s policy in the same file.
Do I need the insurance company’s permission to sell?
No. The policy is your property and the buyer purchases the contract from you. The insurer records the change of owner and beneficiary after closing and is not part of the decision to sell.
Why is universal life the most common policy sold?
Older universal life was often illustrated at crediting rates far above what has actually been paid, while the internal cost of insurance rises with age. That combination drains the account value and produces large premium demands in the insured’s seventies and eighties, which is when owners start looking for exits.
What is an in-force illustration and how do I get one?
It is a projection the insurer runs on your actual policy showing future premiums, values and the projected lapse date. Call the policyholder service number and request it at both current and guaranteed assumptions. It is usually free and typically arrives in one to three weeks.
My account value is nearly zero. Is the policy worthless?
Not necessarily. Buyers price the death benefit, the premium needed to keep the policy in force and the insured’s life expectancy – not the account value. A large death benefit with a low balance can still be a strong candidate, though it also means lapse is close, so act quickly.
What if my policy is a small funeral policy?
Then a settlement almost certainly is not available, because buyers generally need a death benefit of $100,000 or more and pre-need policies are often assigned to a funeral home. Keeping the coverage in place is frequently the best outcome, and an elder law attorney should weigh in before you cancel anything.
How long does a universal life settlement take?
Roughly 60 to 120 days from first review to funded payment. Gathering illustrations and medical records takes the longest. Keep paying premiums throughout, and expect the funds to sit in independent escrow until the insurer confirms the ownership transfer.
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Related Reading
- What Is An In Force Illustration
- How Much Can I Get For My Life Insurance Policy
- How It Works Policy Options
- Life Settlement Vs Surrender
- Sell My Homesteaders Whole Life Policy
- Sell My Homesteaders 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.