Yes — a Principal survivorship (second-to-die) policy can be sold in a life settlement when the policy and its owner qualify, and Principal’s approval is not required, because a life insurance contract is transferable property held by its owner. On joint-life coverage the owner is frequently a trust or a business entity, which determines who signs but not whether the sale is possible.
Principal Financial Group, headquartered in Des Moines, Iowa, has a long history in retirement plans and business-owner planning as well as individual life insurance, and it wrote survivorship coverage on universal life and variable universal life chassis aimed at estate liquidity and business succession. That business-owner orientation matters here: a meaningful share of Principal survivorship policies were bought to fund buy-sell agreements or key-person obligations that no longer exist.
This page covers why two insureds compress offers, what a first death changes, what happens when the business purpose dissolves, what trustees and corporate owners must assemble, and when keeping or shrinking the policy is the better call. Pine Lake Life Solutions is not affiliated with Principal Financial Group, and nothing here is legal, tax or investment advice. For a free policy review, send the policy cover page or call (305) 209-7183.
In This Article
Identify the Contract and Its Owner
Two facts drive everything that follows: which product you hold, and who legally owns it. Pull the specification page and note the issuing company, policy form, issue date, both insureds, face amount, and the owner of record. Survivorship policies are owned by individuals, by irrevocable life insurance trusts, or by business entities, and each owner type has a different signing path.
As of 2026, confirm with Principal whether the survivorship product on your contract remains open for new sales or is a closed in-force block being serviced, and whether any secondary or no-lapse guarantee is still intact. A guarantee broken years earlier by a late or short premium is the single most commonly missed fact in these reviews and changes the analysis substantially. If the policy is a variable survivorship contract, also ask for projections at more than one assumed rate of return, since separate account performance materially changes what the illustration shows.
Two Life Expectancies, One Payout Date
A settlement buyer collects the death benefit and pays every premium in the interim, discounting the stream to present value. Because a survivorship contract pays only after the second insured dies, the buyer must obtain life expectancy reports on both insureds and model the joint distribution. The expected payout date is always later than either individual estimate — sometimes by many years.
The consequences are predictable. Offers generally sit below the roughly 10% to 35% of face value associated with qualifying single-life settlements (GAO-10-775), and many joint-life contracts draw no offer. Illness affecting one insured moves the price much less than families expect, because the healthier life still governs the timing. And fewer institutional buyers underwrite this paper, so bidding tension is thin. See how buyers price a policy and what affects an offer.
When the Business Reason Disappears
Principal’s business-owner focus produced a large number of survivorship policies tied to succession planning: coverage bought so a partner’s family could be bought out, so estate tax on a closely held company could be paid without forcing a sale, or so a farm or operating business could pass intact to the next generation. Every one of those purposes has an expiration date.
When the business is sold, the partners retire, the buy-sell agreement is terminated or rewritten, or the operating asset is converted to cash, the liquidity problem the policy solved may simply be gone. If the policy is owned by the company rather than by individuals or a trust, expect additional documentation: corporate resolutions authorizing the transaction, evidence of who has signing authority, and confirmation that no lender holds a collateral assignment against the policy. Related: a buy-sell policy no longer needed, a key-person policy when the business closes, selling a business-owned policy.
| Policy Owner | Who Signs | Extra Documents Required |
|---|---|---|
| Individual spouses | Both owners | Identification and beneficiary acknowledgments |
| Irrevocable life insurance trust | Current trustee | Trust instrument, successor appointments, consents |
| Corporation or LLC | Authorized officer or member | Corporate resolution, signing authority, entity records |
| Partnership under a buy-sell | Authorized partner | Buy-sell agreement, termination or amendment |
| Any owner with a lender lien | Owner, plus lender | Release of collateral assignment |
After a First Death
Once one insured has died, the contract behaves economically like single-life coverage on the survivor. One expectancy to underwrite, one medical file, a payout horizon no longer pushed out by joint mortality. Providers that declined the policy earlier will often reconsider.
For families, this is the most common moment a survivorship contract becomes genuinely marketable — and the moment a stale plan surfaces, with a surviving spouse still funding premiums on coverage for a tax the surviving estate will never owe. Gather the deceased insured’s death certificate and the current annual statement before requesting a review. See a survivorship policy after a first death.
Trust-Owned Policies and Fiduciary Duty
Where an irrevocable life insurance trust owns the policy, the trust is the seller and the trustee signs. Assemble the executed trust instrument, written confirmation of who currently serves as trustee, and any successor appointments or resignations. Delays most often come from discovering that the named trustee died or resigned and a successor must be appointed first.
Trustees are fiduciaries to the trust beneficiaries. A defensible record documents the alternatives evaluated, why a sale serves beneficiaries better than continuing to fund premiums, and any consents the instrument or state law requires. Where annual exclusion gifts funded premiums, Crummey withdrawal notices should have gone to beneficiaries each year; that history occasionally comes up in diligence and gaps can raise gift-tax questions the family’s own counsel should evaluate. Read: selling an ILIT-owned policy and trust-owned policy sales.
Illustrations, Loans and the Two-Year Rules
Order a current in-force illustration from Principal and specify the runs: minimum premium to carry the contract to maturity on both lives; guaranteed-assumption alongside current-assumption; the effect of any outstanding policy loan with projected interest accrual; and written confirmation of whether a secondary or no-lapse guarantee is still in force and what schedule preserves it. If a lender or the business holds a collateral assignment, that must be released before ownership can transfer, so identify it early.
Confirm contestability status too. Two years from issue — and again from any reinstatement — the carrier may investigate and rescind for material misstatements, and on a survivorship contract both insureds’ application answers fall inside that window. Most state life settlement statutes impose a separate waiting period, commonly two years, with hardship exceptions that vary by state; confirm with your state insurance department. Background: in-force illustrations, contestability, documents needed.
Ranking the Options
Keep the policy when the premium is affordable and a guarantee is intact — that guaranteed death benefit almost always beats what a rational buyer would pay for a distant payout. Reduce the face amount when the purpose remains but the premium does not fit; Principal can quote a smaller sustainable contract. Surrender when the policy is small, the cash value is meaningful and no buyer interest exists, understanding it is normally the lowest-value exit. Sell when the coverage purpose is genuinely gone — the business sold, the buy-sell dissolved, the estate tax no longer expected — the premium is unaffordable, a first death has occurred, or lapse for nothing is the realistic alternative.
Put the numbers side by side using settlement versus keeping and settlement versus cash surrender value. Expect roughly 60 to 120 days for a completed transaction, longer where two medical files, a trustee, or corporate approvals are involved.
To find out where your contract stands, send the policy cover page — insurer, policy number, face amount, issue date and both insureds — for a free, no-obligation policy review, or call (305) 209-7183. Pine Lake Life Solutions is not affiliated with Principal Financial Group and does not provide legal, tax or investment advice.
Frequently Asked Questions
Does Principal have to approve the sale?
No. The owner may transfer the policy, and the carrier records the ownership and beneficiary change once the transaction closes. Pine Lake Life Solutions is not affiliated with Principal Financial Group.
Our company owns the survivorship policy. Can it still be sold?
Generally yes, if the entity is properly authorized. Expect to provide a corporate resolution, evidence of signing authority, and confirmation that no lender holds a collateral assignment. The entity, not the insureds, is the seller.
Our buy-sell agreement was terminated. What happens to the policy?
Nothing automatically. The policy remains in force and premiums remain due until someone acts. If the obligation it funded is gone, evaluate keeping it, reducing the face amount, surrendering it, or selling it before letting it lapse for nothing.
Why are joint-life offers lower?
The benefit is not payable until both insureds have died, so buyers project a longer premium runway and a later payout, which lowers present value. Fewer providers underwrite survivorship contracts, so competitive pressure on price is also weaker.
What if one insured has already died?
The policy is then valued like single-life coverage on the surviving insured, and interest usually improves considerably. Provide the death certificate along with the most recent annual statement when requesting a review.
How does a collateral assignment affect a sale?
A lender’s collateral assignment must be released before ownership can transfer. Identify any assignment early, because obtaining the release from a bank or the business can take several weeks and is a common source of delay.
Is there a waiting period after issue?
Yes. Contestability runs two years from issue or reinstatement, and most state settlement statutes impose their own waiting period, commonly two years, with limited hardship exceptions. Confirm the rule with your state insurance department.
What do I send to begin?
The policy cover page showing the carrier, policy number, face amount, issue date and both insureds. That is enough for a free, no-obligation screen with no commitment to move forward.
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Related Reading
- Can I Sell A Survivorship Life Policy
- Survivorship Policy First Death
- Buy Sell Agreement Policy Unneeded
- Business Closing Key Man Policy
- Can I Sell A Policy Owned By A Business
- Sell Ilit Trust Owned Policy
- Can I Sell A Policy Owned By A Trust
- What Is An In Force Illustration
- What Is The Contestability Period
- Life Settlement Vs Keeping The 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.