Yes — a RiverSource variable universal life (VUL) policy can be sold in a life settlement, and RiverSource’s permission is not required, because the buyer purchases the contract from you and the insurer merely records the new owner and beneficiary. VUL is a securities product as well as an insurance product, which adds a few documents to the file, but it does not add a permission step. Ownership is ownership.
The reason VUL policies reach the secondary market is usually a specific and painful sequence. The account value is invested in subaccounts that rise and fall with the markets. When those subaccounts fall while cost-of-insurance charges are climbing with the insured’s age, the account value is hit from both directions at once. A policy that looked comfortable at 68 can be sending lapse warnings at 80, and the required premium to fix it is often several times what was originally planned.
RiverSource Life Insurance Company carried the IDS Life Insurance Company name until 2006, following American Express’s 2005 spinoff of Ameriprise Financial; policies are distributed through Ameriprise’s advisor network, and the firm’s product emphasis has shifted markedly toward annuities and wealth management over the years. This guide covers what documents a VUL settlement needs and how the offer is shaped. Pine Lake Life Solutions is not affiliated with RiverSource or Ameriprise Financial.
In This Article
The Two Forces Draining a VUL
Every month, a VUL policy deducts a cost-of-insurance charge based on the net amount at risk — death benefit minus account value — multiplied by an age-based rate that accelerates in later years. Separately, the subaccounts holding your account value earn or lose whatever the markets deliver, net of fund expenses and mortality-and-expense charges.
In a good decade those two forces offset. In a bad one they compound: a drop in the subaccounts increases the net amount at risk, which increases the monthly charge, which sells more units at depressed values to pay it. That is the mechanism by which an apparently healthy policy becomes a lapse notice. Understanding it also explains why a settlement buyer may still want the policy — the death benefit is unaffected by the account value’s troubles, provided someone funds the premiums.
Where a VUL Sits Among Its Cousins
It helps to place VUL against the other permanent types. Whole life has guaranteed cash value and a printed schedule. Indexed universal life credits interest tied to an index with a floor and a cap. Guaranteed universal life abandons cash value in exchange for a contractual no-lapse promise. VUL keeps full market exposure with no floor at all — the account value can and does decline.
For settlement pricing, that lack of a floor means the account value is treated as a soft buffer rather than a reliable asset. Buyers focus on the death benefit and the premium required to sustain it, and they will run their projections at conservative assumptions rather than the optimistic returns in your original proposal. Expect the pricing conversation to be about premiums and life expectancy, not about how the funds have performed.
The Documents a Variable Policy Adds
A VUL file starts like any other — the cover page alone is enough for a free review — but a full valuation adds paperwork tied to the securities side of the product:
- The quarterly or annual statement showing subaccount allocations, unit values, account value, surrender value, and any loan.
- An in-force illustration at conservative assumed rates, typically a low fixed return such as 0% or a guaranteed-basis projection, showing the premium needed to sustain the death benefit. Also request a current-assumption version.
- The prospectus or product summary identifying fund expenses, mortality-and-expense charges, and any surrender charge still in effect.
Those documents let a buyer separate what the policy costs to own from what the markets happen to be doing. A HIPAA authorization follows later so life expectancy can be assessed from medical records.
| Permanent Policy Type | How Account Value Behaves | What Buyers Focus On |
|---|---|---|
| Whole life | Guaranteed schedule, possible dividends | Surrender value floor versus death benefit |
| Universal life | Credited interest, no market exposure | Rising cost of insurance and premium solve |
| Indexed universal life | Index-linked with a floor and a cap | Gap between illustrated and credited rates |
| Guaranteed universal life | Little or none by design | Whether the no-lapse guarantee is intact |
| Variable universal life | Full market exposure, no floor | Premium needed at conservative assumptions |
Surrender Charges and the Fixed Account
Two features regularly surprise VUL owners at the comparison stage. The first is a surrender charge schedule that may still be running years after issue, which means the surrender value on your statement can be materially lower than the account value. The second is a fixed or general-account option inside the policy — many owners moved money there after a market decline and forgot.
Check both before comparing anything. The number to compare against a settlement offer is the surrender value, not the account value. Our explainer on how cash surrender value works covers the difference and why it usually favors keeping or selling over surrendering.
If the Policy Is Already Slipping
Many VUL inquiries begin with a notice: the policy will lapse unless additional premium is received. That notice is a deadline, and it is the most important date in your file. A policy still in force can be sold. A policy that has lapsed generally cannot, and reinstating it usually requires evidence of insurability the insured may no longer be able to provide.
Because a settlement typically runs 60 to 120 days, a premium may need to be paid to hold the contract open while the transaction proceeds. Mention the notice and the exact deadline at the first conversation. If your advisor has suggested a reduced death benefit to lower charges, understand that reducing the face amount also reduces what a buyer would be acquiring — get the settlement question answered before shrinking the policy.
Assignment, Escrow, and What to Insist On
Closing works the same as for any permanent policy: an absolute assignment on the carrier’s forms, transferring owner and beneficiary rights, recorded by the insurer and confirmed in writing. Signatures must match the owner name on the policy, and notarization or a signature guarantee is common. On variable products the carrier may also require the transfer to be processed through its variable-products service unit, which can add days.
Insist on two things. First, funds held by an independent escrow agent, released only after the insurer’s written confirmation. Second, if a broker is involved, the gross offer and the net-to-you figure after all compensation, in writing, before you sign. Most states provide a rescission window after closing. See how the policy options work for the complete sequence and partial-sale alternatives.
Worked Example and Qualification
Hypothetical, rounded, for illustration only. A 78-year-old owns a $500,000 VUL policy. The account value has fallen to $22,000, a remaining surrender charge brings the surrender value to $16,000, and the latest in-force illustration at a conservative assumed return says $21,000 a year is now needed to sustain the death benefit to age 100. Surrendering yields $16,000 and ends the coverage. A settlement in the published 10%–35%-of-face band would run $50,000 to $175,000, driven by life expectancy and the premium load. The numbers are invented; the pattern is common.
Typical qualifying profile: insured about 65 or older, death benefit of $100,000 or more, policy in force at least two years, premiums rising or unaffordable, coverage no longer needed. Loans reduce offers dollar for dollar. Check what policies qualify, compare exits in settlement versus surrender, and read further in the education center. To have a policy reviewed at no cost, send the cover page or call (305) 209-7183. For a non-variable contract, see selling a RiverSource universal life policy.
Frequently Asked Questions
Does the fact that a VUL is a securities product complicate selling it?
It adds documents, not permissions. A buyer will want the prospectus or product summary and statements showing subaccount allocations and charges. The transfer itself is still a straightforward change of owner and beneficiary recorded by the insurer.
My subaccounts lost value. Is the policy still worth selling?
Often yes. Buyers price the death benefit and the premiums required to sustain it, not the account value. A policy drifting toward lapse can be attractive to a buyer prepared to fund it properly, which is precisely why the secondary market exists.
Which in-force illustration should I request for a VUL?
Request one at a conservative assumed return, such as a low fixed rate or the guaranteed basis, showing the premium needed to sustain the death benefit to a stated age. Ask for a current-assumption version too. Buyers underwrite to the conservative case.
Why is my surrender value lower than my account value?
Many variable policies carry a surrender charge schedule that runs for years after issue. The surrender value is the account value minus that charge and any loan. When comparing a settlement offer to surrendering, the surrender value is the correct number to use.
My advisor suggested lowering the face amount to reduce charges. Should I?
Consider the sequence carefully. Reducing the face amount lowers monthly charges but also reduces the death benefit a buyer would be acquiring, which lowers any potential offer. It is worth answering the settlement question before permanently shrinking the policy.
A lapse notice has arrived. What now?
Treat it as a deadline and mention it immediately. A policy still in force can be sold; a lapsed policy generally cannot, and reinstatement usually requires evidence of insurability. Since settlements run 60 to 120 days, a premium may be needed to hold the policy open.
Is RiverSource the same company as IDS Life?
Yes. IDS Life Insurance Company was renamed RiverSource Life Insurance Company in 2006, a year after American Express spun off Ameriprise Financial. Contract terms carried over unchanged. Confirm your servicing company using the number on your most recent statement.
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Related Reading
- Cash Surrender Value Life Insurance
- How It Works Policy Options
- What Policies Qualify For Life Settlement
- Life Settlement Vs Surrender
- Education Center
- Sell My Riversource Universal Life 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.