Yes — a variable universal life policy can be sold in a life settlement if you and the policy qualify, and that is true of any carrier’s VUL, including one written or serviced by Illinois Mutual. The contract is your property, the buyer purchases it from you, and the insurer’s permission is not required. The company is not a party to the decision and is not consulted about it.
Illinois Mutual is a family-controlled mutual insurer based in Peoria, Illinois, founded in 1910. Its core business is individual disability income insurance, along with worksite and final-expense life sold through independent agents — not variable products. If you believe you hold a variable policy, confirm with the carrier exactly which contract you own and which company issues and administers it, as of 2026. Variable contracts are securities and are handled through a broker-dealer, so the servicing arrangement is often different from an ordinary life policy.
Whatever the paperwork says on the cover, the settlement analysis for VUL is the same everywhere: buyers care about the death benefit and the cost of keeping it, not about how your subaccounts performed last quarter. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Illinois Mutual.
In This Article
Your Cash Value Is a Moving Target
VUL differs from ordinary universal life in one big way: the cash value sits in separate-account subaccounts that behave like mutual funds. It rises and falls with the markets. There is no guaranteed crediting rate underneath it unless you have moved money into a fixed account option.
That has a practical consequence people often miss. The surrender value you were quoted this month is not the surrender value next month. Comparing a settlement offer against a surrender quote from a statement printed in January is comparing against a number that no longer exists. When you evaluate options, ask for a current-day value, and understand it will move again before you close.
The Charges Working Against the Account
Three layers of cost pull on a VUL account value every month, and they explain why so many of these policies underperform the illustration that sold them.
- Mortality and expense risk charges (M&E). A percentage of separate-account assets deducted by the insurer for insurance risk and administration.
- Cost of insurance (COI). The monthly charge for the pure death benefit. It rises every year with the insured’s age, and it climbs sharply after 75.
- Fund-level expenses. Each subaccount charges its own management fee, layered underneath the policy charges.
When markets are strong and the policy is well funded, returns absorb all of it. When markets are flat or the account is thin, the rising COI eats principal — and a shrinking account value makes each following year worse. That is the spiral that turns a VUL into a lapse risk in the insured’s late seventies and eighties.
What a Buyer Is Actually Buying
Here is the part that reframes the whole decision: a settlement buyer is not purchasing your subaccounts. If the policy is sold, the buyer typically restructures how the contract is funded and simply pays the minimum premium required to keep the death benefit in force.
So the offer is driven by the death benefit, the insured’s age and health, and the projected cost of carrying the policy — not by whether your growth fund had a good year. A VUL with a battered account value and a full death benefit can still be a strong candidate. Some owners are relieved to hear that, because they assume poor fund performance has destroyed the policy’s worth. It has damaged the policy’s ability to sustain itself, which is a different problem — and often the reason selling makes sense.
| Feature | Variable Universal Life | Ordinary Universal Life | Effect on a Settlement |
|---|---|---|---|
| Where cash value sits | Separate-account subaccounts | Insurer’s general account | VUL surrender value changes daily |
| Return | Market-based, no floor | Declared rate with a guaranteed minimum | VUL lapse risk is harder to predict |
| Extra charges | M&E plus fund expenses | Policy charges only | Higher drag on an underfunded VUL |
| What the buyer prices | Death benefit and carrying cost | Death benefit and carrying cost | Same for both; subaccount balance is not the driver |
| Typical settlement range | 10–35% of face value (GAO-10-775) | Depends on age, health and premium | |
Run the In-Force Illustration at Several Return Assumptions
For a VUL, one in-force illustration is not enough. Request projections at more than one assumed rate of return — a realistic mid-range figure, a low figure, and the 0% assumption if the carrier will run it. The 0% run is the one to study, because it shows how long the policy survives if the markets do nothing for you.
Ask the service center for the year of lapse under each scenario and for the premium required to carry the policy to age 100. Those two numbers tell you what you are really facing. Our explainer on reading an in-force illustration covers which columns matter.
Options to Weigh Before Selling
Before going to market, put every alternative on the table:
- Reallocate the subaccounts. Moving to a fixed or conservative option can slow the bleeding, though it will not stop rising insurance charges.
- Reduce the death benefit. A smaller face amount lowers the monthly COI and can make the policy self-sustaining again.
- Surrender. You receive the current cash surrender value, less any surrender charge still in effect, and coverage ends.
- 1035 exchange. Moving the cash value into another policy or annuity has tax rules of its own — ask a CPA.
- Life settlement. A lump sum, typically 10% to 35% of face value per the federal GAO study (GAO-10-775), with coverage ending at closing.
Our comparison of settlement versus surrender and the guide to how much a policy can bring help you frame the trade-off.
Documents, Process and Timing
Send the policy cover page first — carrier, policy number, face amount, issue date, insured’s date of birth. That supports a free review at no cost. If the policy advances, gather the current statement showing subaccount values and surrender value, in-force illustrations at multiple return assumptions, the full contract with the prospectus and any riders, and health information for the life-expectancy reports.
Then expect 60 to 120 days. Authorizations, medical records, one or two independent actuarial life-expectancy reports, bids from licensed institutional buyers, acceptance, and closing through an independent escrow account. Funds are released after the carrier records the ownership change. Keep the policy funded throughout — if the account value runs out mid-process, the contract can lapse and there is nothing left to sell.
This is educational content, not legal, tax or investment advice. Variable policies carry particular tax and securities considerations, so speak with a CPA and a licensed professional before deciding.
Frequently Asked Questions
My VUL subaccounts lost money. Is the policy still worth selling?
Often yes. Buyers price the death benefit and the cost of keeping it in force, not your subaccount balance. Poor fund performance hurts the policy’s ability to sustain itself, which is frequently the reason owners look at selling in the first place.
What are M&E charges?
Mortality and expense risk charges are a percentage of separate-account assets that the insurer deducts for insurance risk and administration. They sit on top of the cost of insurance and the underlying fund expenses, which is why VUL costs more to carry than it first appears.
Why does my premium keep rising when the policy was supposed to be flexible?
The cost of insurance charge increases every year with the insured’s age. When investment returns fall short of the original illustration, that charge is paid out of principal, and the account value shrinks. Eventually more premium is needed to keep the policy alive.
Is the surrender value I was quoted last month still accurate?
No. VUL cash value moves with the markets, so it changes daily. Always request a current-day value before comparing a surrender against a settlement offer, and expect the number to move again before closing.
Does the insurance company have to approve a life settlement?
No. The policy is your property, the buyer purchases the contract from you, and the carrier’s permission is not needed. The company records the ownership and beneficiary change after the sale closes.
Does Illinois Mutual issue variable universal life?
Illinois Mutual is best known for individual disability income coverage plus worksite and final-expense life, not variable products. If you believe you hold a variable policy, confirm with the carrier which contract you own and which company issues and administers it. The settlement analysis is the same regardless of the issuer.
How long does the process take?
Typically 60 to 120 days from application to funded payment. Ordering medical records and waiting on carrier paperwork are the slowest steps. Funds sit in independent escrow until the carrier confirms the transfer.
What do I send to get started?
Just the policy cover page for a free, no-obligation review, or call (305) 209-7183. Nothing is committed by asking, and you can decline any offer at any point.
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
- Life Settlement Vs Surrender
- How Much Can I Get For My Life Insurance Policy
- Education Center
- Sell My Illinois Mutual Universal Life Policy
- Sell My Illinois Mutual 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.