Yes — a National Life Group indexed universal life policy can be sold in a life settlement, and you do not need the carrier’s approval; the buyer purchases the contract and the company records the ownership change. Life Insurance Company of the Southwest, the group’s Texas affiliate, has been one of the more active issuers of indexed universal life, so a great many of these contracts are now held by owners in their sixties, seventies and eighties who are re-evaluating whether the policy still fits.
There is a distinctive audience here. National Life Group built a large presence in the 403(b) and public-school employee market, which means a meaningful share of these policies were purchased by teachers and school staff as part of a retirement conversation. If that describes your policy, the question in front of you is not just insurance — it is whether this contract is still the best use of your money at your current age. Verify the specifics of your own contract with the carrier rather than relying on a decades-old sales presentation.
Pine Lake Life Solutions is independent and not affiliated with National Life Group or LSW. This is educational content and not tax, legal or investment advice.
In This Article
- Compare the Annual Statement With the Original Illustration
- Caps, Participation Rates and the Guaranteed Minimums
- Which Company Actually Holds Your Contract
- How an IUL Is Priced by a Buyer
- Settlement Versus Surrender Versus Reducing the Face Amount
- Documents to Gather and the Transfer Itself
- Timeline, Rescission and Warning Signs
- Taxes and Means-Tested Benefits
- Frequently Asked Questions
Compare the Annual Statement With the Original Illustration
Do this before you make any decision. Put the illustration you were shown at purchase next to your latest annual statement, find the projected account value for your current policy year on one, and the actual account value on the other. The gap between them is the single most informative number you can produce in an afternoon.
Then find the crediting detail on the statement: which index segments were credited, at what rate, and what the caps and participation rates were. Compare those with the assumed rate the illustration used. A 0% floor year still means no growth while monthly charges continue, and several of those years in a row will put a policy well behind schedule. This exercise tells you whether more premium will be required and roughly how much.
Caps, Participation Rates and the Guaranteed Minimums
Indexed universal life credits interest based on an index’s movement, subject to a cap, a participation rate and sometimes a spread, with a floor protecting against negative credits. The important detail is that most contracts allow the carrier to adjust caps and participation rates on future segments, down to guaranteed minimums stated in the policy.
Those guaranteed minimums are the only crediting numbers you can count on, so locate them in your contract. Then ask the service center for your current declared cap and participation rate, since they may be different from what applied at issue. Once you know the guaranteed floor and the current declared rates, you can ask the carrier for an in-force illustration at both current and guaranteed assumptions — the two projections often look nothing alike, and the guaranteed one is the honest planning case.
Which Company Actually Holds Your Contract
“National Life Group” is a marketing name. The insurer on your contract is most likely Life Insurance Company of the Southwest, headquartered in Texas and part of the group since the 1990s, or National Life Insurance Company, chartered in Vermont in 1848 and one of the oldest life insurers in the United States. Look at the first page of your policy to see which one issued it.
The organization has operated under a mutual holding company structure rather than as a publicly traded stock insurer, so policyholders are members and there was no demutualization payout. For a settlement this is background, not an obstacle. What you actually need is the current service phone number from your premium notice and the carrier’s current change-of-ownership form.
How an IUL Is Priced by a Buyer
Buyers estimate the insured’s life expectancy through medical underwriting, then calculate the premium needed to carry the policy until a claim. For an IUL, they generally assume conservative future crediting rather than the illustrated rate, which is why a policy that looks fine on an optimistic projection may still require substantial premium in the buyer’s model.
Attractive profiles share features: face amount of $250,000 or more, insured age 70 or older or with a documented health decline, a modest account value, and no large loan. Less attractive: a small face amount, an insured in excellent health for their age, or a policy so heavily loaned that the net death benefit has shrunk. A policy still inside its contestability period will not be purchased.
| What to compare | Where to find it | What a shortfall signals |
|---|---|---|
| Projected vs. actual account value | Original illustration vs. annual statement | More premium will likely be required |
| Illustrated rate vs. credited rate | Illustration assumptions vs. statement crediting detail | Optimistic assumptions did not materialize |
| Current cap vs. guaranteed minimum cap | Carrier service center vs. policy contract | Future growth may be lower than assumed |
| Cost of insurance trend | Last three annual statements | Rising charges are draining the account value |
| Premium to carry to age 95 | In-force illustration request | The true cost of keeping the policy |
Settlement Versus Surrender Versus Reducing the Face Amount
Three real options, and the right one depends on your facts. Surrendering pays the cash surrender value, which on an IUL may be reduced by surrender charges in the early policy years. Reducing the face amount lowers the required premium and keeps some coverage. Selling ends premiums entirely and produces a lump sum.
A labeled hypothetical: a $350,000 IUL with $22,000 of surrender value needing $11,000 a year. Federal research (GAO-10-775) reported that sellers typically received roughly 10% to 35% of face value and, on average, several times cash surrender value. On this hypothetical those two framings point in the same general direction, but only an underwritten offer produces a real figure. If the surrender value is high relative to face amount, surrender may be the better answer — and a good review will say so.
Documents to Gather and the Transfer Itself
You need the policy cover page, the most recent annual statement, the original illustration if you still have it, and a current in-force illustration at both current and guaranteed assumptions. Request the in-force illustration first; carriers commonly take two to four weeks to produce one, and it drives everything downstream.
The transfer is a change of owner and beneficiary on the carrier’s form, generally signed by both parties and often notarized. Funds are held by a third-party escrow agent and released only after the carrier confirms the recorded change, so the money is in place before ownership moves. If a trust owns the policy, the trustee signs and the carrier will want the trust certification.
Timeline, Rescission and Warning Signs
Expect 60 to 120 days end to end, with medical record retrieval and the in-force illustration consuming most of that. After funding, state law provides a rescission period during which you can undo the sale by returning the proceeds; the length varies by state and should be confirmed in writing.
Red flags are consistent across the industry: upfront fees to evaluate a policy, a dollar quote issued before any documents are reviewed, refusal to disclose compensation, pressure to sign immediately, and the claim that a settlement always beats surrendering. It does not always. To get a straight answer about your own policy, send the cover page for a free policy review or call (305) 209-7183.
Taxes and Means-Tested Benefits
Settlement proceeds are generally analyzed in tiers against your cost basis and the policy’s cash surrender value, with different treatment for each layer. The 2017 Tax Cuts and Jobs Act removed a basis reduction for cost-of-insurance charges, which generally improves outcomes for sellers. Bring your premium and withdrawal history to a CPA rather than estimating.
If the proceeds are meant to pay for care, consult an elder law attorney before closing. Medicaid counts assets and reviews transfers within a look-back window, and Supplemental Security Income has its own rules. Getting the sequencing right beforehand is far easier than untangling an eligibility problem afterward.
Frequently Asked Questions
My IUL was sold to me as part of a retirement plan. Does that change anything?
It changes the questions worth asking, not your right to sell. If the policy was purchased primarily for accumulation and it has not performed as illustrated, compare what keeping it costs against what it will realistically deliver. A CPA or fee-only financial planner is the right person to run that comparison with you.
Can the carrier lower my cap rate after issue?
Most indexed universal life contracts permit the carrier to adjust caps and participation rates on future segments, down to a guaranteed minimum stated in the policy. That minimum is the only figure you can rely on. Ask the service center for your current declared rates and locate the guaranteed minimums in your contract.
Does LSW have to approve the settlement?
No. The carrier processes a change of owner and beneficiary and does not approve the sale itself. Expect a standard form, possible notarization, and written confirmation once the change is recorded. Use the service number on your latest premium notice to request the correct current form.
What is my policy likely worth?
It depends on the insured’s life expectancy, the death benefit, and the premium a buyer must pay going forward. Federal research (GAO-10-775) found sellers typically received roughly 10% to 35% of face value. Anyone naming a number before reviewing documents is guessing rather than quoting.
Is a low account value bad for my chances?
Not necessarily. Buyers purchase the death benefit, so a low account value simply means less of the price is compensating you for money you could withdraw. What hurts is a high ongoing premium requirement, since that is the buyer’s cost of holding the policy.
What if I have an outstanding loan?
You can still sell. The loan reduces the net death benefit and is typically settled at closing from the purchase price. Withdrawals and loans also affect your cost basis, so bring the full history to your CPA when reviewing the tax picture.
Should I just surrender instead?
Sometimes yes. If the surrender value is large relative to the face amount, if the insured is healthy for their age, or if the death benefit is under about $100,000, surrendering can be the better result. An honest review compares both and will tell you when selling is not worth pursuing.
How do I start?
Send the policy cover page for a free review — the page listing owner, insured, face amount and issue date. Adding your latest annual statement makes the assessment sharper. There is no fee, no obligation, and you can stop at any point before closing.
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 Policies Qualify For Life Settlement
- Cash Surrender Value Life Insurance
- Sell My National Life Group Universal Life Policy
- Sell My Ameritas Indexed Universal Policy
- What Is Cash Surrender Value
- Education Center
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.