Yes. A universal life policy issued by Security Mutual Life Insurance Company of New York can be sold in a life settlement, without the carrier’s approval, because a buyer is acquiring a contract that already belongs to you. That has been the legal position since Grigsby v. Russell in 1911, and it applies identically to every insurer in the country.
Universal life is the most frequently settled policy type in the secondary market, and there is a structural reason for it. UL charges a cost of insurance that rises every single year as the insured ages. The account value is supposed to absorb those charges. When it cannot, the carrier demands a much larger premium, and owners in their late seventies and eighties are suddenly asked for money they do not have.
That moment is where a settlement earns its place. This page explains how the cost of insurance works, why the in-force illustration is the one document that matters most, what buyers look for, and when keeping or restructuring the policy is smarter than selling. Pine Lake Life Solutions is not affiliated with Security Mutual Life Insurance Company of New York.
In This Article
- About the Carrier, and Why It Is Not a Spinoff Story
- How Cost of Insurance Quietly Breaks a UL Policy
- The In-Force Illustration Is the Key Document
- What Makes a Universal Life Case Attractive to Buyers
- A Hypothetical Side-by-Side
- Restructuring: The Option People Skip
- Process, Timing, and the Change of Ownership
- Red Flags, Taxes, and Next Steps
- Frequently Asked Questions
About the Carrier, and Why It Is Not a Spinoff Story
Security Mutual Life Insurance Company of New York is headquartered in Binghamton, New York, and dates to the 1880s. Many policyholders researching a sale run into stories about carriers that demutualized, sold their retail blocks, or spun off a separate public company, leaving people unsure who holds their contract. Security Mutual’s history is comparatively simple: it has long operated as a policyholder-owned mutual company rather than a shareholder-owned one. Verify its current corporate status and whether it still issues new individual policies in 2026.
Confirm two more things directly with the company before relying on them: the current A.M. Best financial strength rating, and the policyholder service phone number published on the company’s own site. Ratings get reaffirmed or revised, and service numbers get consolidated. The number printed on your last premium notice is usually the safest starting point.
How Cost of Insurance Quietly Breaks a UL Policy
A universal life policy is essentially a bank account with an insurance charge deducted monthly. The charge, called the cost of insurance, is based on the net amount at risk and the insured’s attained age. At 55 it is small. At 80 it can be many times larger. Meanwhile, credited interest on the account value has been modest for most of the last two decades compared with the assumptions used when older policies were sold in the 1980s and 1990s.
The result is a slow squeeze. Policies illustrated at high interest assumptions decades ago never accumulated what was projected, and now the monthly deductions are consuming principal. Owners often first learn of it through a lapse warning notice. Some carriers have also raised cost of insurance rates on older blocks; confirm whether that has happened on your specific policy by asking the service center directly, in writing.
The In-Force Illustration Is the Key Document
An in-force illustration is a projection the carrier prepares showing how your policy performs going forward under stated assumptions. For a settlement evaluation, one version is not enough. Ask for an illustration at guaranteed maximum charges and minimum guaranteed interest, showing the premium required to carry the policy to age 100.
That guaranteed-basis projection is the worst-case scenario the contract permits, and it is close to how a buyer prices the case. Also ask for a current-assumptions version so you can see the gap. Request the numbers in writing, note the date, and keep the document, because carriers regenerate illustrations and the assumptions can change between requests. Add your latest annual statement and a loan payoff quote and you have most of what a review requires.
What Makes a Universal Life Case Attractive to Buyers
Buyers generally focus on insureds 65 and older, death benefits of at least $100,000, and a health picture that has changed since the policy was issued. For universal life specifically, they add a cost analysis: how much premium is needed each year, and how fast that number grows.
A policy with a large face amount, a thin account value, and an insured whose life expectancy has shortened is the classic profile the market responds to. A policy with a huge account value is less interesting for settlement purposes, because the owner already has a strong surrender option. Across the market, settlement proceeds broadly range from about 10% to 35% of face value, and the multiple over cash surrender value reported by the GAO in GAO-10-775 was roughly four to eight times.
| Illustration you request | Assumptions used | What it tells you |
|---|---|---|
| Guaranteed basis to age 100 | Maximum charges, minimum interest | The worst case the contract allows; closest to buyer pricing |
| Current assumptions to age 100 | Today’s charges and credited rate | The optimistic view; shows the size of the gap |
| Minimum premium to keep in force 5 years | Current charges | Short-term cost if you need time to decide |
| Reduced face amount projection | Lower death benefit | Whether smaller coverage becomes self-supporting |
| Level vs. increasing death benefit option | Same policy, different option | Whether the net amount at risk can be lowered |
| Loan payoff quote | Current balance plus accrued interest | How much of the value is already spoken for |
A Hypothetical Side-by-Side
Illustration only, not a quote. A 79-year-old owns a $400,000 Security Mutual universal life policy. The account value is $18,000, the cash surrender value is $18,000 since surrender charges expired years ago, and the carrier’s guaranteed-basis illustration says roughly $19,000 a year is now needed to carry it to 100.
Surrendering yields $18,000 once. Lapsing yields nothing and wastes decades of premiums. Continuing to pay costs more each year than the entire surrender value. In that shape of case a settlement is usually worth pricing, because the owner is otherwise choosing between a small one-time payment and an unaffordable obligation. The right decision still depends on the actual offer, which nobody can predict without medical underwriting.
Restructuring: The Option People Skip
Before selling, ask the carrier to illustrate a reduced death benefit. Cutting a $400,000 policy to $150,000 can slash the required premium, sometimes to a level the account value can support with no further out-of-pocket payments at all. If the goal was final expenses rather than income replacement, that may serve the family better than cash today.
Also ask whether switching the death benefit option, from increasing to level, would lower the net amount at risk and therefore the cost of insurance. And check whether the policy holds an accelerated death benefit rider or a chronic illness rider; if the insured qualifies, those pay from the policy directly and are usually faster and simpler than a sale.
Process, Timing, and the Change of Ownership
A typical case runs 60 to 120 days: policy review, medical records and life expectancy analysis, offers, contracts, then carrier processing. The transaction itself closes through a change of ownership, or absolute assignment, on the carrier’s own forms, which name a new owner and new beneficiary. Escrow holds the funds until the carrier confirms it has recorded the change.
Ask the service center in advance which form numbers they use and whether notarization is required, since that is one of the few points where a seller can prevent delay. Most states also provide a rescission period after funding, commonly around 15 days, allowing the seller to unwind the sale by returning the money. New York residents should expect additional state-specific disclosures.
Red Flags, Taxes, and Next Steps
Watch for anyone who pressures you to sign before you have seen competing offers, anyone who charges an upfront fee to shop your policy, or anyone who tells you the tax treatment is simple. Broadly, settlement proceeds are taxed in layers tied to your basis, and the 2017 federal tax law altered part of that math. That is a description of the rules, not advice; a CPA should do the arithmetic on your policy.
If Medicaid is the driver, an elder law attorney should look at the sequence first, because turning a policy into cash creates a countable asset and gifting the proceeds can trigger look-back penalties. To find out whether your Security Mutual universal life policy is a realistic candidate in 2026, send the policy cover page for a free policy review or call (305) 209-7183.
Frequently Asked Questions
Why is universal life the most commonly sold policy type?
Because its cost of insurance rises with age while its account value often falls short of what was illustrated years ago. That combination produces owners who face steep premium increases late in life, which is exactly the situation the secondary market was built to address.
What is an in-force illustration and how do I get one?
It is a carrier-prepared projection of how your policy will perform going forward. Call the policyholder service number on your statement and request it in writing, asking specifically for a guaranteed-basis version to age 100. Carriers provide them at no charge.
Can the carrier raise my cost of insurance rates?
Contracts typically allow charges up to a guaranteed maximum, and some carriers across the industry have raised rates on older blocks. Ask your carrier in writing whether any increase has been applied to your policy and what the guaranteed maximum is.
Should I surrender instead of selling?
Compare the two in writing. Surrender is faster, taking days rather than months, and can be the right call when the surrender value is small and the money is needed immediately. A settlement often pays more but takes 60 to 120 days.
Does an outstanding loan stop the sale?
No. Loans are common and are generally paid off at closing from the proceeds, with you receiving the balance. Get a payoff quote including accrued interest before you compare options.
What paperwork will I need?
A recent policy statement or cover page, a current in-force illustration, a loan payoff quote if applicable, and a signed HIPAA authorization allowing medical records to be reviewed for a life expectancy assessment.
Who pays the premiums after the sale?
The buyer takes over all future premiums once ownership transfers. Your obligation ends and the death benefit belongs to the buyer rather than your beneficiaries.
Is Pine Lake affiliated with Security Mutual?
No. Pine Lake Life Solutions is independent and has no relationship with Security Mutual Life Insurance Company of New York. Contact the carrier directly for anything about your contract.
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Related Reading
- What Policies Qualify For Life Settlement
- Life Settlement Vs Surrender
- How It Works Policy Options
- What Is A Policy Loan
- Education Center
- Sell My Security 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.