Business-owned life insurance policies — including key-person, buy-sell, and corporate-owned life insurance (COLI) — can be sold through a life settlement when the original business need no longer exists.
Business-Owned Policies
Companies buy key-person policies, fund buy-sell agreements, and carry corporate-owned life insurance. When the business need changes, these policies often get surrendered or forgotten.
They shouldn't be. Business-owned policies — especially large ones — are highly sought after on the secondary market.
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If your business holds any of these, a secondary market may offer substantially more value than surrender.
Policies taken out on executives or critical employees who have since left the business, retired, or are no longer in the same role.
Policies used to fund business continuity when a partner exits. When the partnership dissolves or the policy is no longer needed, it can be sold.
Large COLI portfolios often contain policies that have outlived their original business purpose. The secondary market pays meaningful value for them.
When split-dollar agreements are unwound or the employer-employee relationship ends, the policy may be eligible for settlement.
Policies used to informally fund deferred compensation obligations that have since been restructured or eliminated.
The business receives the settlement proceeds. It's a straightforward transaction that can improve your balance sheet.
For most business-owned policies, the transaction is clean: the policy is sold, the lender or trust is discharged if applicable, and the net proceeds go directly to the company.
Tax treatment varies. Some COLI transactions have specific rules around recognition of gain. We always recommend involving your tax counsel before closing.
4–7×
Typical secondary market multiple vs. cash surrender value for qualifying policies
$250K+
Minimum face value for most institutional buyers. Business-owned policies often qualify easily.
60–90 days
Typical timeline from policy review to funded transaction
We work directly with business owners, CFOs, trustees, and estate planning attorneys. A confidential review takes minutes and costs nothing. Find out what your policy is worth before making any decisions.
Key Takeaway
Business-owned policies often sit on the books long after the original need is gone. A life settlement converts that dormant asset into cash that can be redeployed in the business.
Yes. Key-person policies, buy-sell agreement policies, and corporate-owned life insurance (COLI) can all be sold through life settlements when the original business need no longer exists.
When a key employee has left, a buy-sell agreement has been restructured, or a business no longer needs the coverage — these are common triggers for selling a business life insurance policy.