What advisors need to know about the life settlement boom

Recently, the Life Insurance Settlements Association (LISA) released its market statistics for 2025 and the figures are great news for clients and advisors alike.

“The 2025 data reflects something real shifting in consumer behavior,” said Bryan Nicholson, LISA’s executive director.

LISA members completed 2,955 settlements, a 9.48% increase over 2024, representing more than $3.7 billion in total policy value. That's not a blip.

It reflects a growing number of policyholders who are taking a harder look at every asset they own. In an environment where the cost of living has put pressure on household budgets, a life insurance policy that seemed manageable to maintain a few years ago may no longer work.

When that calculation changes, more people are finding out what their policy is actually worth on the open market.

LISA has not seen any meaningful decline in the pool of eligible policies. An estimated $50 billion in policies that could qualify are still lapsed or surrendered every year.

“The volume growth in 2025 barely scratches that surface, which tells you the awareness gap is beginning to close, but the opportunity remains enormous,” Nicholson explained.

Why the valuation gap is so wide

The 8.71x multiplier in 2025, the highest in LISA’s five-year dataset, is the number that should make every financial professional stop and reconsider how they're counseling clients on unwanted policies.

According to Nicholson, the gap exists because insurers and the secondary market are valuing fundamentally different things.

When a carrier offers a cash surrender value, they're offering their cost to exit the relationship, a number calculated to serve the carrier's interest, not the policyholder's. The secondary market prices a policy based on what a competitive pool of buyers is actually willing to pay.

That competition simply doesn't exist when a policyholder surrenders directly to their carrier.

The result in 2025 was that LISA members paid consumers $554.6 million more than those same policyholders would have received by surrendering.

“That's real money that stayed in the pockets of people who needed it,” Nicholson added.

What’s driving demand for life settlements?

The secondary market has continued to remain active and competitive and it can deliver meaningfully better outcomes for policyholders than the surrender alternative.

The 2025 data confirms that, with nearly 3,000 transactions completed and consumers recovering an average of more than $212,000 per policy sold.

What shifts demand are policyholder circumstances. Rising premium costs on certain policy types accelerate the point at which maintaining a policy stops making sense.

“When that calculation changes, policyholders face a choice: surrender for the carrier's offer, let the policy lapse entirely, or find out what the open market will pay,” Nicholson said.

The 2025 data suggests more people are choosing to find out.

Lisa Rehburg, president at Rehburg Life Insurance Settlements, pointed out that as more financial and insurance advisors become more aware, educated and comfortable with life settlements, they’re using them as a mainstream financial planning tool to help their clients.

“More policyholders are choosing to sell, because selling can be a better financial option for them versus lapsing or surrendering their policies. The numbers work for them,” Rehburg explained.

How advisors should approach life settlements

Before discussing life settlements, advisors should take the time to educate themselves, as there are widespread misconceptions about how they work.

For example, Rehburg found that some advisors consider only whole life policies with a lot of cash as eligible to be sold, or that only clients who are very sick can sell their policies. Neither of these assumptions is correct.

“More visibility and education is important,” Rehburg said.

Next, advisors must position life settlements as an option to explore, not necessarily a recommendation to pursue.

Sometimes life changes, and the policy may no longer be needed, no longer wanted or no longer affordable.

“Life settlements are not perfect for everyone, nor should they be, but if the decision is made to lapse or surrender a policy, a life settlement can be a better financial solution for clients and their advisors,” Rehburg explained.

The advisors who handle them well build them into standard policy reviews as due diligence, not a sales pitch.

“Clarify that a life insurance policy is an asset," Nicholson said. "If a client considers surrendering it or letting it lapse, they deserve to know what the open market says it's worth first.”

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