Most people arriving at this question are trustees, not policy owners, and that changes what a good answer looks like. Second-to-die coverage is almost always held inside an irrevocable life insurance trust, so the person facing the decision is a trustee — frequently an adult child, a sibling, or a family friend who accepted the role years ago without expecting to make a six-figure judgment call. What that person needs is not a sales pitch about liquidity. It is a defensible process: identify the asset, understand what it is worth and why, compare the real alternatives, document the reasoning, and tell the beneficiaries.
A threshold check first. We have not been able to confirm that Washington National Insurance Company issued a survivorship product, and we will not assert one exists. Washington National’s business is weighted toward supplemental health coverage — cancer, critical illness, and accident policies — distributed through career and independent agents at the worksite and in the senior market. Survivorship coverage is an advanced estate-planning instrument sold by a different kind of producer to a different kind of client. If a second-to-die contract is in the trust file, read the issuing company line on the face page before assuming Washington National wrote it.
Once the contract is identified, second-to-die economics apply regardless of carrier. The death benefit is payable only after both insureds have died, so buyers underwrite two lives and price the joint distribution, offers run lower than on comparable single-life policies, and fewer providers bid at all. The rest of this page is written for the person who has to decide.
In This Article
Identify the contract and the issuing company
A true survivorship contract names two insureds on the face page and states the death benefit is payable on the death of the survivor. If the face page names one insured, it is a single-life policy. If it names two but pays at the first death, it is a joint first-to-die contract, a different product with inverted economics that is usually sold to fund a buy-sell agreement.
On the carrier: Washington National Insurance Company was organized in Illinois in 1911, originally writing health and accident coverage for teachers, and its home office today is in Carmel, Indiana. It operates as a subsidiary of CNO Financial Group, Inc., a Delaware corporation headquartered in Carmel, alongside Bankers Life and Casualty Company and Colonial Penn Life Insurance Company. On the domiciliary state we would rather be precise than convenient: the company was organized under Illinois law and the Illinois Department of Insurance has examined it as recently as the mid-2010s, while its home office sits in Indiana. Confirm the domicile through the NAIC’s Consumer Information Source or with the company rather than inferring it from an address.
The corporate history explains old paperwork. Conseco acquired Washington National in 1997. Conseco, Inc., the holding company, filed for Chapter 11 reorganization in December 2002 and emerged in 2003 — the regulated insurance subsidiaries were not the bankruptcy debtor and policyholder contracts continued in force under state supervision throughout. In 2009 Conseco Insurance Company was merged into Washington National, and in 2010 the holding company became CNO Financial Group. A contract bearing any of those names is governed by its original terms; corporate reorganization never rewrites an issued policy. Our page on what happens when a carrier merged and who owns the policy states the rule.
If the issuing company turns out to be someone else, that is progress rather than a setback. The trust’s own records, an old premium notice, the bank draft on a statement, or a state unclaimed property search will identify the actual carrier, and only that carrier can produce the in-force illustration and verification of coverage any decision requires.
The buyer’s calendar, and why it pushes the number down
Think of a settlement buyer as an investor with a calendar. The buyer marks a projected payout year, fills every year between now and then with a premium payment it must make, and discounts the eventual death benefit back to today at a required rate of return. Anything that moves the payout year later, or raises the annual premium, lowers what the buyer can pay.
On a second-to-die contract, the payout year is set by the survivor — whichever insured lives longer. The buyer therefore models the joint last-survivor distribution rather than either individual life expectancy, and that distribution sits materially later than most trustees assume. Adding four years to the calendar on a policy costing $30,000 a year is $120,000 of additional outlay plus four more years of discounting against the same death benefit.
Three practical consequences:
- Offers are a lower percentage of face amount than on an otherwise comparable single-life policy.
- The bidding pool is thinner. Some institutional buyers do not price joint mortality at all and will pass without reviewing the file. That is an argument for running a genuinely competitive process rather than accepting an unsolicited number — our page on how to compare two life settlement offers covers what to look at beyond the headline figure.
- A serious diagnosis affecting one insured moves the number very little, because the buyer is waiting on the other one. Trustees consistently find this counterintuitive, and setting expectations correctly at the start prevents a difficult conversation with beneficiaries later.
The general treatment is at can I sell a survivorship life policy.
The problem the trustee usually actually has
In practice, most trustees are not asking whether the policy could be sold. They are asking what to do about a premium notice the trust cannot fund.
The mechanism behind that is predictable. The trust was designed around annual gifts from the grantors, sized to the premium projected when the contract was illustrated, with Crummey withdrawal notices sent to beneficiaries each year to support the gift tax treatment. Two things then went wrong over twenty years. The contract, if written on a flexible-premium chassis, required more than the illustration projected because credited rates fell short and cost-of-insurance charges rose with attained age. And the grantors’ willingness or ability to keep gifting changed — through a business sale, cognitive decline, a shift in the estate picture, or simple fatigue with a plan nobody has revisited since it was drawn.
So the trustee faces a policy that needs more money from a plan that produces less. Doing nothing is a decision with a cost: the contract lapses, the trust’s principal asset evaporates, and the beneficiaries lose a benefit the grantors paid decades of premiums for. That is the outcome a trustee most needs to avoid, and it is more common than a bad sale.
The first concrete step is to find out what the contract actually requires. Order an in-force illustration on guaranteed assumptions — minimum crediting, maximum charges — and ask specifically for the premium needed to carry the contract until the later insured reaches 100, plus the projected lapse year if the current premium continues unchanged. Those two figures frame every option that follows, and they are the same figures a buyer would model. Our page on a life settlement versus ILIT planning covers the alternatives at a planning level.
| Trustee’s situation | Most likely right answer | Document to get first |
|---|---|---|
| Premium notice exceeds what gifting can fund | Reduce the death benefit or elect reduced paid-up | Guaranteed-basis in-force illustration |
| Estate exposure has disappeared, both insureds healthy | Compare surrender against any realistic offer | Written cash surrender value quotation |
| Both insureds 80+ with impaired health, face $1M+ | Run a competitive settlement process | Trust instrument and trustee authority evidence |
| Trust instrument may not authorize a sale | Counsel review before anything else | Complete instrument with all amendments |
| Policy issued within the last two years | Address the premium; a sale is not available | Policy face page showing the issue date |
| First insured has died | Re-price as a single-life risk | Certified death certificate filed with the carrier |
A fiduciary checklist before any decision
Trustees are generally held to standards of prudence, loyalty, impartiality among beneficiaries, and a duty to keep beneficiaries reasonably informed. The exact formulation varies by state and by the trust instrument, and how it applies to a specific decision is a question for the trust’s counsel rather than for an article. What follows is a process checklist, not legal advice.
- Read the instrument for authority. Does the trust expressly permit selling an asset and distributing proceeds? Older instruments are sometimes drafted narrowly around holding a policy and paying premiums. If authority is unclear, that is a question for counsel before anything else happens.
- Establish the alternatives in writing, not just the sale. Get quotations for reducing the death benefit, for a reduced paid-up election if available, and for the current guaranteed cash surrender value.
- Run a competitive process if a sale is pursued. A single unsolicited offer is not evidence of value. Multiple bids from licensed providers, documented, are.
- Document the reasoning contemporaneously. A short memorandum recording what was considered, what was quoted, and why the chosen path was selected is worth far more than a reconstruction two years later.
- Inform the beneficiaries in advance. They are named in the instrument and will learn of the transaction regardless. A trustee who told them beforehand is in a materially better position than one who did not.
- Review the Crummey notice file. Gaps do not block a sale, but assembling trust records is exactly when they surface, and they belong in front of the trust’s attorney and CPA.
- Confirm who signs. The trustee signs as owner of record; both insureds sign HIPAA authorizations because the medical records are theirs.
Buyer’s counsel will request the complete trust instrument with all amendments, evidence of the trustee’s acceptance and current authority, the beneficiary designation naming the trust, and a certificate of trust or legal opinion. Our pages on selling an ILIT or trust-owned policy and what documents are needed for a life settlement list the full package.
Contestability, a first death, and what each changes
Two contract facts determine whether a file goes anywhere at all.
Contestability. Nearly every life policy allows the carrier to investigate and rescind for a material misstatement on the application during the first two policy years. A survivorship contract issued inside that window attracts essentially no institutional interest, because a buyer would be acquiring a contract the carrier can still challenge. Providers ask for the issue date first for this reason. Our explainer on the contestability period covers how it runs.
A first death. If one insured has died, the contract still pays on the survivor’s death, but the buyer now underwrites a single life. That removes the joint mortality problem and generally widens the bidding pool, because providers who avoid survivorship files will look at a single-life risk. Whether the number improves depends on the survivor’s age and health. Two mechanical requirements follow: file a certified death certificate with the carrier, since every buyer requires an in-force illustration and verification of coverage reflecting current status, and read the contract for any provision that changes premiums, charges, or death benefit after the first death, because some designs have one.
A first death also resets the planning question, not just the valuation question. The trust’s purpose, its funding mechanism, and the surviving grantor’s own estate picture all deserve a fresh look with the estate attorney at that point. Sometimes the conclusion is that the policy remains the most tax-efficient asset in the structure and should be preserved at almost any cost. That conclusion earns nobody a fee, which is a good reason to make sure it gets stated.
Rank the options, then act
Work down this list rather than starting at the bottom.
- Reduce the death benefit to a level the existing account value can sustain. The most underused option available and often the complete solution when the only problem is funding.
- Elect reduced paid-up if the contract offers it, converting accumulated value into a smaller, fully paid death benefit with no further premiums.
- Restructure the gifting so the trust can meet the true required premium, if the grantors are willing and able and the estate exposure is real.
- Surrender for cash value. On an older, well-funded contract the guaranteed cash surrender value can exceed anything a buyer would pay, particularly when both insureds are in reasonable health. When that is true, surrendering nets more.
- Sell. Realistic when both insureds are older with impaired health, the face amount is well above the market’s working minimum of roughly $100,000, the contract is past contestability, and the trust plainly authorizes a sale.
- Distribute the policy out of the trust, where the instrument allows and the tax consequences have been examined with counsel.
To get a straight read, send the policy face page showing both insureds, the most recent annual statement, and the trust instrument. Withhold Social Security numbers, banking information, and medical records at this stage — nobody needs them to tell you whether a file is worth pursuing, and an early request for them is a reason to pause. There is no legitimate upfront fee for a policy evaluation.
Pine Lake Life Solutions provides education and a free policy review. We do not provide legal, tax, or investment advice, and a second-to-die policy inside an irrevocable trust engages fiduciary duty, gift tax history, and the estate plan at the same time. The drafting attorney and the CPA belong in the conversation before a trustee signs anything. The general trust-ownership framework is at can I sell a policy owned by a trust. To reach a reviewer, call (305) 209-7183 with the face page in front of you.
Frequently Asked Questions
Does Washington National issue survivorship or second-to-die policies?
We have not been able to confirm that Washington National Insurance Company issued a survivorship product, and we will not assert one exists. Its business is weighted toward supplemental health coverage sold through worksite and senior-market channels, while survivorship coverage is an advanced estate-planning instrument sold by different producers. Read the issuing company line on the policy’s face page before assuming.
As trustee, what should I document before selling a trust-owned policy?
At minimum, record what alternatives were quoted, including reducing the death benefit, a reduced paid-up election and the current surrender value, how many licensed providers were invited to bid, what each offered, why the chosen path was selected, and when beneficiaries were informed. A short contemporaneous memorandum is worth far more than a reconstruction later. Confirm the specific standards with the trust’s counsel.
Why does one insured’s serious illness barely change the offer?
Because a second-to-die contract pays only after both insureds have died, so the buyer is effectively waiting on the healthier life. An illness affecting one insured shifts the joint last-survivor projection modestly at best. The situation changes materially after a first death, when the contract becomes a single-life risk on the survivor and providers who avoid joint mortality will look at it.
Conseco filed for bankruptcy. Does my policy still exist?
Yes. Conseco, Inc., the holding company, filed for Chapter 11 reorganization in December 2002 and emerged in 2003, but the regulated insurance subsidiaries were not the bankruptcy debtor. They stayed under state insurance department supervision with their own capital requirements and policyholder contracts remained in force. The holding company was renamed CNO Financial Group in 2010.
What happens if the trustee does nothing?
On a flexible-premium contract, the policy eventually lapses and the trust’s principal asset disappears, along with decades of premiums the grantors paid. Inaction is a decision with a cost, and in practice it is a more common bad outcome than a poorly negotiated sale. Order a guaranteed-basis in-force illustration showing the projected lapse year at the current premium before deciding anything.
Should we accept an unsolicited offer on a trust-owned policy?
Not without competition. A single offer is not evidence of value, and offers on the same policy vary meaningfully between buyers with different portfolios and return requirements, which matters more on survivorship files because fewer providers bid. Invite multiple licensed providers, compare the full terms rather than the headline figure, and record the process in the trust file.
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Related Reading
- Can I Sell A Survivorship Life Policy
- Sell Ilit Trust Owned Policy
- Can I Sell A Policy Owned By A Trust
- Life Settlement Vs Ilit Planning
- What Is The Contestability Period
- How To Compare Two Life Settlement Offers
- Carrier Merged Who Owns Policy
- What Documents Are Needed Life Settlement
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.