Aug 18, 2026
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Add us on GoogleAmong other insurance plans, life insurance is the one you buy hoping it doesn’t have an untimely payout. Frank wanted it to pay out anyway — to him, and while he was still alive.
And he found a buyer for his policies. Frank, an auditor at a major railroad, told NPR’s Planet Money that he sold both policies, worth a combined $1.5 million, to a company, and that when he dies, the money goes to whoever owns them by then. His wife signed away her rights as beneficiary, and he got $430,000 in exchange for the policies.
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He was diagnosed years ago with a rare stage 4 lung cancer, then got onto a drug that put it into remission. He’d bought both policies before any of that. Now he’s betting he can invest that $430,000 to exceed the $1.5 million his family would have collected after his death.
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What Frank got for his policies
The deal is called a life settlement. You sell your policy to an investor, and in exchange the buyer becomes the new owner, takes over the premiums and collects the death benefit when you die. What they’ll pay comes down to the insured’s life expectancy weighed against the size of the policy, so it depends on how soon they think you’re going to die.
Which puts the seller somewhere strange. Frank said he was rooting against his own health while the bids came in. “I was hoping they would come back and say I had 12 months,” he said.
He went online, filled out a few forms and asked for pricing. Direct buyers started calling, all of them wanting his consent form so they could pull his medical records. One didn’t even want the records. He offered $200,000 right there, if Frank moved fast.
Frank hired a broker instead, Evergreen Settlements, and let it run an auction. Bidders got his file, worked out their own guess at how long he had, and priced accordingly. The winning offer came back from Coventry: $470,000, and he paid the broker $40,000 out of it.
He’d paid about $20,000 in premiums, so $430,000 is more than 20 times his money. The plan is to invest the $430,000 and end up with more than the $1.5 million his family would have collected — which takes a 12% return every year for 12 years, according to Frank’s own spreadsheet, and if he dies early, they’re out hundreds of thousands.
A year on, and Frank says he hasn’t put it all in the market. So far it’s bought a 20-year-old BMW and a trip to Costa Rica with his family.
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How the whole life settlement market started
Selling your policy to a stranger has been legal since 1911, when Justice Oliver Wendell Holmes wrote for the U.S. Supreme Court that “so far as reasonable safety permits, it is desirable to give to life policies the ordinary characteristics of property.” Almost nobody used it until the AIDS crisis.
Scott Page told Planet Money how it started for him. His partner Greg was dying from AIDS, had stopped working and couldn’t cover a $3,000 bill on a $100,000 policy.
A wealthy stranger from a support group fronted the money in $10,000 installments — $40,000 in all — to be repaid out of the death benefit. Page turned that arrangement into a business and took a 3% commission. By the late 1990s, he says, it had run more than 3,000 of these deals for men dying of AIDS. He later sold the business to a private-equity firm.
Nobody in that position was shopping for the best price. They needed the money that month.
What to do if you’re the one holding the policy
Your insurer will quote you a price to cancel a policy you no longer want, and it’s usually low. Last year that offer averaged $24,360, while people who sold to outside buyers averaged $212,066, according to annual market data from Life Insurance Settlement Association (LISA). Most insurers won’t volunteer it, and only a handful of states require them to.
And once you start looking, don’t take the first call. Remember, one buyer rang Frank and offered $200,000. He hired a broker to run an auction instead, and the winning bid was $470,000. You’ll need to give your broker a cut out of the money. So ask what the cut is before you sign — the U.S. Government Accountability Office (GAO) found some people close these deals without knowing.
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Godwin Oluponmile is a content specialist, SEO strategist and copywriter with seven years of expertise in finance, Web 3.0, B2B SaaS and technology. His work has been featured in publications such as Entrepreneur, HackerNoon, Blocktelegraph and Benzinga.
