Tax Implications
Most life settlements are considered taxable under IRS Revenue Ruling 2009-13.
Tax Implications Explained
Tax Illustration
This graph illustrates how the proceeds from a sale would be taxed on a policy with a total value of $1 million and a cash surrender value of $90,000. When considering this or any other financial planning option, you are advised to consult your tax advisor.

Most life settlements are considered taxable.

Tax As Ordinary Income (CSV) - The amount of the settlement that is between cost basis and the policy cash surrender value in excess of cost of insurance and related expenses. The policy’s CSV is the amount you would receive if you were to surrender their policy back to the insurance carrier.

Capital Gains - For the portion of the settlement that is above the policy's cash surrender value.

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