Life Insurance Options
Explained
Life insurance transactions can come in different forms. Usually, the seller of a policy determines which type of life settlement is the best solution for their circumstances. Each case is unique, and we will work with you to find the best option for your situation.
Understanding Your Life Settlement Options
Not all states or cases will necessarily allow for any particular type of settlement transaction. Understanding the differences between your options is the first step toward making the decision that is right for you and your family.
There are three primary life settlement options to consider: Traditional, Retained Death Benefit (RDB), and Hybrid. Each offers a different balance between cash received today and the death benefit passed on to your beneficiaries tomorrow.
As a direct buyer, Abacus Life works with each client on an individual basis to provide options based on their unique situation. There is no obligation to accept any offer at any time.
Which Option Is Right for You?
The right choice depends on your immediate financial needs, your desire to leave a legacy for beneficiaries, and whether you still have a need for life insurance coverage. Our specialists are available at 800-561-4148 to walk through your situation with you.
Three Options at a Glance
Death Benefit / Face Value
The full amount beneficiaries receive upon the insured's death. This is the ceiling of any settlement offer.
Cash Surrender Value
What the insurer pays if you cancel your policy — always less than a life settlement offer.
Premium Payments
The ongoing cost to maintain the policy. With any settlement, the buyer assumes all future premiums.
Traditional Life Settlement
Sell your full life insurance policy for a cash amount above the surrender value but below the death benefit. The most common life settlement option and usually what comes to mind first.
A traditional life insurance policy provides the policyholder with a guaranteed amount to pass on to their beneficiaries, regardless of how long they live, provided the contract is maintained throughout its entirety. Most policies also offer a withdrawal clause, which allows the contract holder to cancel their coverage and receive a cash surrender value.
In the case of a traditional settlement, a licensed provider (the buyer) will pay the policy owner a cash amount above the surrender value, but below the death benefit. The premiums will then be paid by the buyer or its financing entities for the remainder of the insured's life. This entity will receive the face value of the policy upon the death of the insured.
The seller received all possible benefits from the policy during their lifetime and will receive nothing at the time of the insured's death. There are no restrictions on how the proceeds are used.
- Cash lump sum paid to the policy seller
- All future premium payments assumed by the buyer
- No further obligations or claims on the policy
- No restrictions on use of proceeds
Robert, age 82
"I was deeply in debt and my life insurance payments were becoming a financial burden. I read about viatical settlements and did my research. I checked with numerous companies about a multitude of different ways of selling my life insurance plan. Abacus Life was by far the best deal for me. Not only were they able to come in several weeks after the process started with other companies and still generate an offer faster than anyone else, they even advanced a part of my settlement."
Robert and his wife took a dream national park trip with their advance and were able to purchase a cabin and catch up on all of their debts and medical bills.
Retained Death Benefit (RDB)
Eliminate premium payments while keeping a guaranteed percentage of the death benefit for your beneficiaries. No cash payment now, but your loved ones are still protected.
A Retained Death Benefit (RDB) is a life settlement option that allows the policy owner (seller) to retain a portion of their life insurance policy's death benefit, in lieu of receiving a cash-only lump sum settlement.
When an RDB offer is accepted, the buyer takes over 100% of premium payments. No further obligations or payments are to be made by the seller. A death benefit is a payout to the beneficiary of a life insurance policy when the insured or annuitant dies. For life insurance policies, death benefits are not subject to income tax, and named beneficiaries ordinarily receive the death benefit as a lump-sum payment. The policyholder can structure how the insurer pays the death benefits.
In the circumstance where the insured individual dies, the beneficiary receives their guaranteed percentage portion of the death benefit payout while the fund receives the death benefit for the portion of the policy they purchased from the policyholder.
- Beneficiaries retain a guaranteed percentage of the death benefit
- Buyer assumes 100% of future premium payments
- No further obligations or payments required from the seller
- Death benefit paid to beneficiaries tax-free upon the insured's passing
Terri, Age 64
"I would recommend Abacus to anyone who is coping with a life-changing event like cancer and needs to make tough financial decisions to improve their quality of life. They treated me like a real person and I truly felt Abacus had my best interests in mind."
Terri was suddenly faced with stage IV cancer. Shortly after, her husband lost his job after three decades of service. They needed financial options to face these devastating life changes — and they needed them quickly.
Hybrid Life Settlement
Receive a cash payment now and retain a guaranteed percentage of the death benefit for your beneficiaries — combining the advantages of both the Traditional and Retained Death Benefit options.
For the hybrid option, the policy seller can receive a combination of traditional life settlement proceeds and retained death benefits. With this option, you receive a cash payment now, your beneficiary receives a guaranteed percentage of the benefit when the policy ends, and you have no further obligation to pay future premiums.
This is considered the most flexible option and is ideal for policyholders who have an immediate financial need but also want to preserve some legacy for their loved ones. The specific percentages — how much you receive in cash versus how much the beneficiary retains — are negotiated on a case-by-case basis.
As with all life settlement options, the buyer assumes all future premium payments at the time of settlement.
- Cash lump sum paid to the policy seller at settlement
- Beneficiaries retain a guaranteed portion of the death benefit
- Buyer assumes all future premium payments
- No further obligations or payments required from the seller
The Best of Both Worlds
The hybrid option lets you negotiate the split between immediate cash and your beneficiary's guaranteed death benefit. Both are secured at settlement — with no future premium obligations.
Exact percentages are determined case-by-case based on your policy, age, health, and financial goals. Call us to discuss what split is realistic for your situation.
Not Sure Which Option Is Right for You?
Use our Life Settlement Calculator for a free consultation with no obligation to sell.
Life Settlement CalculatorComparing Your Three Options
Use this table to understand which option best aligns with your financial goals and legacy wishes.
| Feature | Traditional | Retained Death Benefit | Hybrid |
|---|---|---|---|
| Cash payment to seller | ✔ Yes — lump sum | ✘ None | ✔ Yes — partial lump sum |
| Beneficiary retains death benefit | ✘ No | ✔ Yes — guaranteed % | ✔ Yes — guaranteed % |
| Future premium payments | ✔ Buyer assumes all | ✔ Buyer assumes all | ✔ Buyer assumes all |
| Further seller obligations | ✔ None | ✔ None | ✔ None |
| Best suited for | Policyholders who need maximum cash now and no longer need to provide a death benefit to beneficiaries. | Policyholders who primarily want to eliminate premium payments while preserving a legacy for beneficiaries. | Policyholders who have an immediate financial need but also want to leave something for their loved ones. |
| Payout relative to death benefit | 50–80% of face value in cash | Varies — guaranteed % retained | Combination of cash + retained % |
What Types of Policies Qualify?
Almost all types of life insurance policies may qualify for a life settlement. The specific eligibility depends on the policy type, face value, premiums, and the insured's age and health.
Universal Life Insurance
Flexible premium permanent life insurance. One of the most common policies eligible for a life settlement.
Whole Life Insurance
Permanent coverage with a savings component. Policies with accumulated cash value often qualify for competitive offers.
Term Life Insurance
Time-limited coverage that is often surrendered for little or no value. A life settlement can unlock significant value — especially for viatical cases.
Convertible Term Policies
Term policies that can be converted to permanent coverage. These may qualify even when a standard term policy would not.
Group Life Insurance
Employer-sponsored group policies may qualify under certain circumstances. Contact Abacus to discuss eligibility.
Survivorship Policies
Joint policies that insure two lives. These can qualify for a settlement, though the process may be more complex.
Most policies with a face value of $100,000 or more qualify. The insured is typically 70 years or older, though those with a terminal diagnosis may qualify at any age.
Ready to Explore Your Options?
To get started, fill out our free and instant Life Settlement Calculator. Abacus will supply you with an initial, no-obligation offer within 24-48 hours of contacting us, assuming you qualify.
Each case is specific, and there is no one-size-fits-all answer. Our team handles each case individually and with the utmost confidentiality and sensitivity. We are a direct buyer — meaning we cut out the middleman and pass more value back to you. Abacus has paid over $1.2 billion to policyholders since 2017.
If you are unsure which option is right for you, our licensed specialists are available at 800-561-4148. We would love to discuss all of your options.
The Abacus Promise
We work with each client individually to find the option that best fits their unique situation.
- Initial offer within 24-48 hours
- HIPAA-certified privacy
- A+ Better Business Bureau
- No obligation to sell, ever
- Licensed in all states except Alaska
- NYSE: ABX, publicly traded
