Viatical and Life Settlements: The Secondary Market for Life Insurance Policies (2026)

Life insurance has been the mainstay of many families and businesses in the United States for almost two centuries, and its role in providing needed funds upon the death of a family’s breadwinner or a business’s key person in the future is likely to continue to be vital to their growth and security. The need for life insurance often changes, however, as businesses evolve and families enter new lifestyle periods.

The children whose education was financially assured by a large life insurance policy on the life of mother or dad may now be grown and educated with children of their own. Likewise, the business partner whose interest in the enterprise was to be purchased upon his or her death by a life insurance policy’s death benefit proceeds may have moved on to pursue other interests. In situations like these—and in many others too numerous to list—existing life insurance policies may no longer be needed.

Traditionally, owners of unneeded life insurance policies had limited options available to them with respect to their disposition. Typically, such life insurance policies were surrendered for their cash value or simply permitted to lapse for nonpayment of premiums. Beginning in 1989, however, those options increased dramatically with the birth, in the United States, of a secondary market that often enables a policyowner to obtain more than the policy’s cash surrender value by selling it to a third party in a viatical or life settlement.

When you have completed this course, you should be able to: