Yes — a Washington National variable universal life policy can be sold in a life settlement when you and the policy qualify, and the insurer’s permission is not involved; the buyer purchases the contract directly from you. The investment subaccounts inside a VUL make the policy feel complicated, but they do not change the underlying fact that the contract is property you own and may transfer.
What the subaccounts do change is how you should evaluate the decision. In a VUL, cash value sits in separate-account investment options that move with the markets. The surrender value on a statement dated in February is not the surrender value in October. Meanwhile the policy deducts mortality and expense risk charges, fund-level management fees, administrative fees, and a monthly cost of insurance that climbs steeply with the insured’s age — all from the same balance the market is moving around.
This guide covers why a buyer’s offer is anchored to the death benefit rather than your fund performance, how an underfunded VUL unravels, and what extra paperwork a variable contract brings. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Washington National Insurance Company or CNO Financial Group. Education only — not legal, tax, or investment advice.
In This Article
- Separate Accounts: This Month’s Value Isn’t Next Month’s
- The Fee Stack You Are Paying
- How an Underfunded VUL Comes Apart
- Why an Offer Isn’t Based on Your Fund Balance
- Reallocating Before a Sale — Talk to Your Own Advisor
- Washington National, CNO, and What You Actually Hold
- Documents Unique to a Variable Contract
- Timing, Escrow, and How to Begin
- Frequently Asked Questions
Separate Accounts: This Month’s Value Isn’t Next Month’s
With whole life you can look up the guaranteed cash value on a contractual schedule. With guaranteed universal life it is near zero by design. With VUL it is whatever the subaccounts are worth today, minus any surrender charge still in effect.
That has a real consequence when weighing options. If you ask whether a settlement beats surrendering, the surrender side of that comparison is not a fixed number — it moved last quarter and it will move next quarter. A settlement offer, by contrast, is a stated dollar figure with an expiration date attached to it.
Check whether a surrender charge still applies to your contract. Many VUL policies impose declining surrender charges over the first decade or longer, which means what you would actually be paid on surrender is lower than the account value your statement displays. Our explainer on cash surrender value covers the gap between account value and what a carrier actually hands you.
The Fee Stack You Are Paying
Variable policies carry more layers of cost than most owners track:
- Mortality and expense risk charges, assessed against separate-account assets to compensate the insurer for the guarantees and expenses it carries.
- Fund management fees, charged inside each subaccount, stacked on top of the M&E.
- Monthly cost of insurance, priced on the net amount at risk and the insured’s attained age.
- Administrative charges and premium loads, often a flat monthly fee plus a percentage taken off each premium before it reaches the subaccounts.
In strong market years these are absorbed by gains and go unnoticed. In flat or declining years they come out of principal. That combination — charges rising with age while the balance fails to replenish — is the mechanism behind most VUL trouble.
How an Underfunded VUL Comes Apart
The pattern repeats often enough to describe precisely. The policy is funded at a level that a strong illustrated return would have supported. Actual returns come in lower. The account value stalls. As the insured reaches the 70s, the monthly cost of insurance accelerates, and because it is charged on the net amount at risk — the gap between the death benefit and the account value — a shrinking balance makes that charge rise for two reasons simultaneously.
Each month the deductions pull harder on an account that is not refilling. Eventually the carrier sends notice that the policy will lapse without a substantial payment, frequently far more than the owner has ever paid in a year.
Warning signs worth watching: an account value that fell in a year when markets rose, a net amount at risk that keeps widening, and any statement language about the policy failing to sustain itself. If you see them, request an in-force illustration before making any decision.
Why an Offer Isn’t Based on Your Fund Balance
A settlement buyer is not purchasing your investment allocation. After the transfer, the buyer typically restructures how the policy is funded anyway. What is being acquired is the insurer’s obligation to pay a death benefit; what is being assumed is the cost of keeping that obligation alive.
So the pricing inputs are the death benefit, the insured’s estimated life expectancy from independent medical underwriting, and the projected premium load required to carry the policy forward. Account value enters indirectly in two ways: it sets the surrender floor an offer should exceed, and a healthier balance reduces near-term carrying cost.
Federal GAO market data (GAO-10-775) found sellers typically received roughly 10% to 35% of face value, on the order of four to eight times cash surrender value. For an eroded VUL, that multiple can look dramatic — but the dollar figure still rests on the same inputs as any other policy. See how offers are determined.
| VUL Feature | Effect on You | Effect on a Buyer’s Offer |
|---|---|---|
| Subaccount market performance | Moves your account and surrender value month to month | Minor; affects near-term carrying cost only |
| Death benefit amount | What your beneficiaries would receive | Primary driver of value |
| M&E and fund fees | Drag on account growth every year | Raise the cost of keeping the policy in force |
| Rising cost of insurance | Accelerating monthly deduction after age 70 | Reduces what a buyer can pay |
| Surrender charge still in effect | Lowers what surrender would actually pay you | Lowers the floor an offer must beat |
| Outstanding loan or withdrawal | Reduces death benefit and account value | Deducted from your proceeds at closing |
Reallocating Before a Sale — Talk to Your Own Advisor
People sometimes ask whether they should move subaccounts to a conservative option before selling, on the theory that it protects the value. That is an investment question and this page does not give investment advice. Discuss it with your own licensed advisor.
Two factual points are worth having in front of you for that conversation. First, a buyer’s offer is driven by the death benefit and the carrying cost, not by your allocation, so a reallocation does not by itself raise or lower what you are likely to be offered. Second, the policy must stay in force through closing, and an allocation change that reduces the account value’s ability to absorb monthly charges could put that at risk on a thinly funded contract.
Whatever you decide, do not make changes that could jeopardize the policy remaining in force during the transaction.
Washington National, CNO, and What You Actually Hold
Washington National Insurance Company traces to 1911 and is today a subsidiary of CNO Financial Group, headquartered in Carmel, Indiana. CNO was named Conseco until its 2010 rename, and Washington National came into the group through Conseco’s acquisition in the late 1990s; it has since serviced legacy blocks from predecessor and affiliated carriers. If your contract bears a company name that no longer appears on your correspondence, that is why — confirm with the service center which block administers your policy. A.M. Best has rated Washington National in the “A-” (Excellent) range in recent years; confirm the current 2026 rating with A.M. Best or the carrier.
Two things to verify on your own paperwork. Washington National’s business skews heavily toward supplemental health coverage — cancer, critical illness, accident — sold to middle-income and worksite customers. Those products pay benefits while you are living and cannot be sold in a settlement, so check that your cover page states a death benefit payable at the insured’s death. And because that market buys modest amounts, face amounts frequently land below the $100,000 death benefit buyers require, since underwriting, life-expectancy reports, legal review, and escrow cost about the same on a small policy as a large one. Check the number before doing anything else.
Documents Unique to a Variable Contract
A VUL file carries a few items that other policies do not. Expect to provide the annual statement showing account value broken out by subaccount, the current surrender charge schedule if one still applies, and confirmation of any loans or withdrawals, both of which reduce the death benefit and your net proceeds at closing. Because VUL is a registered product, the transaction may also involve additional disclosure or a licensed intermediary depending on the parties involved.
Request an in-force illustration with the assumptions specified, since the default is often a flattering one. Ask for a projection at a low assumed gross return — 0% and 4% make useful stress tests — alongside one at your current allocation’s assumed rate, plus the premium required to carry the policy to age 100 at each. The spread between those runs is the honest measure of the risk you are holding. Our explainer on in-force illustrations walks through the columns before you make the call.
For an initial free review, one page is enough: the policy cover page with insurer, policy number, face amount, and issue date.
Timing, Escrow, and How to Begin
Plan on roughly 60 to 120 days from first review to funded payment, with medical record retrieval the usual bottleneck. Keep premiums current throughout — an underfunded VUL can deteriorate quickly, and a lapse mid-process ends the transaction with nothing to show for it.
When an offer arrives, get it in writing and ask what the number looks like net of every commission and fee; if a broker sits in the chain, ask for gross and net side by side. At closing, funds should be held by an independent escrow agent and released only after the insurer confirms the ownership change on its books. Never transfer ownership against a promise of later payment. Most states then provide a rescission window during which the sale can be unwound.
To find out whether your policy is a candidate, send the cover page for a free, no-obligation policy review or call (305) 209-7183. Related reading: how the policy options work, is a life settlement worth it, and our guide to Washington National guaranteed universal life.
Frequently Asked Questions
Can a variable universal life policy be sold like other policies?
Yes. A VUL is a contract you own, and the Supreme Court affirmed the owner’s right to transfer a life insurance policy in Grigsby v. Russell in 1911. Subaccounts add complexity to valuation and to the paperwork, but they do not affect your right to sell, and the carrier’s permission is not required.
Will a good market year raise my settlement offer?
Not meaningfully. A larger account value slightly reduces a buyer’s near-term carrying cost and raises the surrender value an offer should beat, but offers are anchored to the death benefit and the insured’s estimated life expectancy. Buyers are not purchasing your fund performance.
What are M&E charges?
Mortality and expense risk charges are fees assessed against separate-account assets to compensate the insurer for the guarantees and expenses it bears. They sit on top of the underlying fund management fees, administrative charges, and the monthly cost of insurance. In flat markets these layered costs come out of principal.
Why does my cost of insurance keep climbing?
It is charged on the net amount at risk, the gap between the death benefit and the account value, and it is priced by the insured’s attained age. As the balance erodes and the insured ages, both factors push the charge up, which is how underfunded VUL policies unravel in the 70s and 80s.
Should I move my subaccounts to cash before selling?
That is an investment decision and this page does not give investment advice; talk to your own licensed advisor. Bear in mind that an offer is based on the death benefit and carrying cost rather than allocation, and that the policy must stay in force through closing.
Does a surrender charge still apply to my policy?
It may. Many VUL contracts apply declining surrender charges over the first decade or more, meaning what you would actually receive on surrender is less than the account value shown on your statement. Ask the carrier for your current surrender charge schedule so you are comparing accurate figures.
My Washington National coverage might be a supplemental health plan. Can that be sold?
No. Supplemental health products such as cancer and critical illness coverage pay benefits during your lifetime and have no death benefit to transfer. Washington National writes a large volume of that business, so the mix-up is common. Check whether your cover page states a face amount payable at the insured’s death.
Is Pine Lake affiliated with Washington National?
No. Pine Lake Life Solutions is not affiliated with, endorsed by, or acting on behalf of Washington National Insurance Company or CNO Financial Group. This page is educational and is not legal, tax, or investment advice. To see whether your policy qualifies, send the cover page or call (305) 209-7183.
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Related Reading
- Cash Surrender Value Life Insurance
- How Much Can I Get For My Life Insurance Policy
- What Is An In Force Illustration
- How It Works Policy Options
- Is A Life Settlement Worth It
- Sell My Washington National 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.