Consumer guidance, explained by Citizens Life Group
NAIC Life Settlements Consumer Guide, Explained
The National Association of Insurance Commissioners (NAIC) publishes a consumer guide to selling an existing life insurance policy. Start with the official NAIC guide (PDF), then use this explanation to prepare questions about companies, offers and the decision to sell.
An independent explanation from Citizens Life Group, a licensed life settlement brokerage. Not an NAIC publication or endorsement.
What does the NAIC life settlements guide cover?
The guide covers alternatives, financial considerations, privacy, broker and provider roles, and questions about a proposed sale. Source: NAIC consumer guide.
The sections below add practical questions and document requests from Citizens Life Group, with supporting guidance from FINRA and the IRS. Use them alongside the original publication when talking with a company about your policy.
From general guidance to your own decision
What should you ask before selling your policy?
Start by identifying who will handle the sale, what information they need and what you would receive. Keep the answers with your policy documents so you can compare companies and offers on the same basis.
Citizens Life Group's questions to put the guidance to use:
On a small screen, scroll across the table to read each column.
| Your decision | Ask the company | Request in writing |
|---|---|---|
| Choose who handles the sale | Who is responsible for my case, and who will seek offers? | The names and roles of the companies involved, plus an explanation of the proposed process. |
| Understand an offer | What amount would I actually receive? | A written offer showing the price, disclosed fees and costs, and net proceeds. |
| Compare offers consistently | Are these offers based on the same policy information? | The date, conditions and expiration of each offer, and any information still needed. |
| Know what you authorize | What does this document allow the company to do? | The agreement and information-release forms, with an explanation of any exclusivity terms. |
Before you authorize work, ask which documents let a company collect records or seek offers and which document would commit you to a sale. For a checklist to keep beside you during a call, see our questions for choosing a life settlement broker.
Should you use a life settlement broker or a provider?
The NAIC guide describes two routes: a broker can comparison-shop for you, or you can approach providers and compare offers yourself. Source: NAIC guide, page 2.
Broker
Represents the seller
A life settlement broker markets the policy to potential buyers and negotiates offers on the owner's behalf. Ask how the broker will seek competing bids and work to maximize your offer.
Provider
Purchases the policy
A life settlement provider is the buyer in the transaction. If you approach buyers directly, you organize the applications, follow-up questions and offer comparisons yourself.
Ask who was approached and what bids were received. FINRA identifies these as questions that help a seller assess the shopping process. Source: FINRA, “Protect Yourself.”
How do you compare life settlement offers and broker fees?
Compare the amount you would receive after disclosed costs, together with the conditions of each offer. A headline price alone leaves out information you need to make a decision. FINRA recommends understanding transaction costs and asking whether bids are competitive. Source: FINRA seller guidance.
For each offer, keep these details together:
Buyer and offer status
Identify the proposed buyer. Ask whether the amount is an initial estimate or a written offer following the buyer’s review.
Amount you would receive
Record the offer, all disclosed deductions and the net proceeds. Confirm whether an amount already includes a deduction so you do not subtract it twice.
Conditions and expiration
List what still needs to happen before the offer can close and when the offer expires. Ask what could change the amount.
Payment and transfer
Escrow means an independent party holds the payment during the transfer. Confirm the sequence of payment and ownership changes, and who pays premiums until the sale is completed.
When you work with Citizens Life Group, there is no upfront cost. The broker commission is paid from the settlement proceeds at closing, and every fee and commission is disclosed in writing before you sign. If you decide not to sell, you pay nothing.
Citizens Life Group does not provide tax advice. We recommend consulting a tax professional before deciding to sell.
What else should you resolve before accepting an offer?
Consider the effect on your coverage and finances as well as the offer. The following questions help you identify the information to gather and the person who can answer.
Could you meet your needs while keeping the policy?
Ask your insurer about options available under your contract, such as a policy loan, a change in coverage or an accelerated death benefit. Availability depends on your policy and circumstances. FINRA recommends checking alternatives with the insurer before a settlement.
How could a sale affect taxes or public benefits?
Selling a life insurance policy can create taxable income. Certain qualifying viatical settlements can receive different federal tax treatment, but the requirements matter. Ask a tax professional to review your policy's tax basis and the proposed sale. Separately, ask the agency administering any needs-based benefits how receiving the money could affect eligibility.
Life settlement tax considerations IRS sale guidance IRS viatical guidance FINRA benefits considerations
Who can receive your personal and medical information?
Read the information-release forms before signing. Ask who will receive your records, whether information may pass to later buyers and whether ongoing health updates will be requested. FINRA explains that a sale can involve continuing information sharing.
How will payment and any cancellation right work?
The NAIC guide raises escrow and cancellation after payment. Ask your state regulator and an attorney about the applicable terms. Request the escrow party's name, any cancellation deadline, what starts it and how to cancel.
Citizens Life Group does not provide tax or legal advice. We recommend consulting a tax professional and an attorney about your circumstances.
For the complete sale process, see how to sell your life insurance policy.
Private Client Life Settlement Brokerage
Who does Citizens Life Group serve?
Citizens Life Group is a licensed life settlement brokerage for policy owners seeking professional representation when selling their life insurance. We handle both life settlements and viatical settlements, specializing in high-value policies. We represent the seller as a fiduciary and use competitive bidding among institutional buyers to help maximize the offer. Individual results vary.
There is no upfront cost. Start with the policy type, coverage amount and basic information about the insured. A broker reviews the details and explains what is needed next.
Citizens Life Group and its affiliated brokers are licensed in the states where they operate. Contact us to confirm licensing and availability in your state.
Questions about the NAIC consumer guide
Does the NAIC guide recommend specific life settlement companies?
No. The publication contains no company shortlist or ratings. Use it to guide your own evaluation of a broker or buyer.
Where should you verify a life settlement company's license?
Contact your state insurance department. Ask which authority the company and professional need, and how to check their status and any disciplinary record. The NAIC state directory helps you find the regulator. Our state rules guide provides additional starting points.
Does the guide address viatical settlements?
Yes. It discusses sales involving terminal or chronic illness as well as other life settlements. For more detail, read our viatical settlement guide. Tax treatment requires a separate review of the applicable rules and your circumstances.
Is this the same as the NAIC Life Insurance Buyer's Guide?
No. The life settlements publication concerns selling a policy you already own. The NAIC Life Insurance Buyer's Guide (PDF) helps people considering life insurance coverage. Choose the document that matches the decision you are making.
Sources and page details
The NAIC publication is the original consumer resource. The practical prompts, offer fields and explanations on this page are Citizens Life Group's, supported by the additional sources linked below.
- NAIC life settlements consumer guide (PDF)
The original two-page publication discussed on this page.
- FINRA: What You Should Know About Life Settlements
Independent consumer guidance on alternatives, bids, costs and privacy.
- NAIC directory of state insurance departments
Find the appropriate regulator for licensing and state-specific questions.
- IRS Revenue Ruling 2020-05
Federal income-tax guidance on the sale of a life insurance contract.
- IRS Publication 525: Accelerated Death Benefits
Federal tax rules for qualifying accelerated benefits and viatical settlements.
Prepared by Citizens Life Group. Page updated . This is the date of CLG's explanation, not a new edition date for the NAIC publication.
Learn about our brokerage and Managing Director Jeff Hallman, a Florida licensed life agent (line 0214) and appointed viatical settlement broker (line 0266). To verify his credentials, search by name in the Florida Department of Financial Services Licensee Search.
Citizens Life Group does not provide tax or legal advice. We recommend consulting a tax professional and an attorney before making decisions about a policy sale.