Introduction

Many policyholders ask:

• Do I qualify for a life settlement?
• What are the requirements to sell a life insurance policy?
• Is there a minimum age for a life settlement?
• What types of policies qualify?

Eligibility is not automatic. Qualification depends on actuarial modeling, underwriting standards, and policy economics — not simply policy ownership.

If you are new to the concept, begin with the full overview:
Read More: How the Life Settlement Process Works

This article explains the eligibility criteria used in the regulated secondary market and clarifies common misconceptions about qualification. This content is provided for educational purposes only and does not constitute legal, tax, or financial advice.

Quick Eligibility Summary

You may qualify for a life settlement if:

• You are typically age 65 or older
• You own a permanent life insurance policy (universal, whole, variable)
• Your policy has a face value generally above $100,000
• Premium payments are ongoing
• Health factors support underwriting viability

Qualification depends on actuarial review and policy economics. Not all policies qualify. Not all qualified policies are appropriate to sell.

What Are the Requirements to Qualify for a Life Settlement?

Life settlement eligibility criteria generally fall into four categories:

1. Age of the insured
2. Health and life expectancy
3. Policy type
4. Premium and economic viability

Each factor is evaluated independently.

Is There a Minimum Age for a Life Settlement?

Age is one of the most important qualification factors. Most life settlements involve insured individuals who are:

• Age 65 or older
• Frequently age 70+

Younger individuals may qualify in cases involving significant health impairment, but the secondary market primarily focuses on seniors. Age alone does not guarantee eligibility. However, without sufficient age or health factors, a policy may not meet underwriting viability standards.

How Does Health Affect Life Settlement Eligibility?

Health status directly influences life expectancy modeling. Independent underwriting firms review:

• Medical records
• Physician statements
• Prescription history
• Diagnostic reports
• Actuarial mortality tables

Life expectancy is estimated using statistical projections — not clinical predictions. Shorter projected life expectancy generally increases economic viability because institutional buyers use discounted cash flow modeling to evaluate risk-adjusted returns.

Read More: How the Life Settlement Process Works

What Types of Life Insurance Policies Qualify?

Policy structure significantly affects eligibility. Policies that commonly qualify include:

• Universal life
• Whole life
• Variable universal life

Convertible term policies may qualify if converted to permanent coverage. Non-convertible term policies typically do not qualify because they lack long-term guaranteed death benefit structure.

Read More: Alternatives to a Life Settlement

What Is the Minimum Policy Amount Required?

There is no universal statutory minimum. However, most institutional buyers evaluate policies with:

• A face value of $100,000 or more
• Often $250,000+ for broader market interest

Smaller policies may not justify underwriting and administrative costs within institutional portfolio structures.

How Do Premiums Affect Qualification?

Premium burden plays a central role in life settlement eligibility. Buyers evaluate:

• Current annual premium
• Future projected premiums
• Funding structure
• Policy sustainability

If ongoing premiums are disproportionately high relative to projected life expectancy, the policy may not qualify.

Settlement pricing is not arbitrary negotiation. It is based on discounted cash flow modeling, actuarial life expectancy projections, premium load analysis, and internal rate of return calculations.

Read More: Understanding the Secondary Market for Life Insurance

Who Typically Qualifies for a Life Settlement?

Common qualification profiles include:

• Seniors who no longer need coverage
• Individuals with changed estate planning goals
• Business owners whose succession needs evolved
• Policyholders experiencing increased premium burdens
• Individuals seeking liquidity during retirement

Qualification, however, is determined by underwriting — not circumstance alone.

What Situations Usually Do Not Qualify?

Understanding disqualifiers prevents unrealistic expectations. Policies may not qualify if:

• The insured is young and in excellent health
• The face amount is very small
• The policy is non-convertible term
• The policy is near lapse with minimal remaining value
• There are ownership or contestability issues

Qualification requires both actuarial viability and policy stability.

Are Life Settlements Regulated?

Yes. Life settlements are regulated primarily at the state level. Most states require:

• Licensed life settlement brokers or providers
• Mandatory disclosure forms
• Defined rescission periods
• Compensation transparency
• Privacy protections
• Anti-fraud safeguards

The National Association of Insurance Commissioners (NAIC) developed the Life Settlements Model Act to promote consistent consumer protection standards.

Additionally, the U.S. Government Accountability Office (GAO) confirms that life settlement oversight is administered through state insurance departments. Eligibility exists within regulated frameworks — not informal private transactions.

Does Qualification Mean You Should Sell Your Policy?

No. Qualification indicates economic viability under market modeling. It does not constitute a recommendation.

Before proceeding, policyholders should evaluate:

• Estate planning implications
• Family expectations
• Tax exposure
• Medicaid or public benefit eligibility

Read More: Risks of Selling a Life Insurance Policy
Read More: How Are Life Settlements Taxed?

Frequently Asked Questions (FAQ)

1. What is the minimum age to qualify for a life settlement?
Most life settlements involve insured individuals age 65 or older, though younger individuals with significant health impairments may qualify in certain cases.

2. Can I qualify if I am in good health?
Possibly, but excellent health combined with younger age may reduce underwriting viability. Life expectancy projections are a key factor in eligibility.

3. Can term life insurance qualify for a life settlement?
Convertible term policies may qualify if converted to permanent coverage. Non-convertible term policies generally do not qualify.

4. Does qualifying mean I should move forward?
No. Qualification indicates that underwriting supports potential economic viability. Suitability depends on personal financial, estate, and tax considerations.

For more answers, check out our FAQ page.

Final Thoughts

Life settlement qualification depends on structured actuarial evaluation — not assumption. Age, health, policy structure, premium burden, and regulatory compliance all factor into eligibility.

Not every policy qualifies. Not every qualified policy should be sold. Understanding the eligibility criteria allows for informed evaluation rather than reactive decisions.

Curious if your policy qualifies? Start an Educational Review with us today.