What Is a Life Settlement?
A life settlement is the legal sale of an existing life insurance policy to a licensed third-party buyer for a lump-sum cash payment. The amount you receive is typically more than the policy's cash surrender value, but less than its face value. Once the sale is complete, the buyer assumes ownership of the policy, takes over premium payments, and receives the death benefit when the insured passes away.
Life settlements are a federally recognized financial transaction and are regulated at the state level. In Illinois, the Illinois Department of Insurance oversees and enforces the applicable rules. This secondary market gives policyholders a legitimate alternative to simply lapsing or surrendering a policy — often recovering significantly more value in the process.
To learn more about how this process works in general, visit our How It Works page.
Is Selling a Life Insurance Policy Legal in Illinois?
Regulated by: Illinois Department of Insurance
Life settlements are legal and regulated in Illinois
The Illinois Department of Insurance regulates life settlements under a framework designed to protect consumers and ensure market integrity. Illinois requires providers and brokers to be licensed and to meet disclosure and reporting obligations. The state's large population and significant financial services industry make it an active life settlement market.
Chicago's status as a major financial center means that many Illinois residents have access to sophisticated financial advisors who are increasingly familiar with life settlement options as part of comprehensive retirement and estate planning.
Licensing Requirements in Illinois
Life settlement providers and brokers operating in Illinois must hold valid licenses issued by the Illinois Department of Insurance. The licensing process includes qualification requirements and ongoing compliance standards.
When working with LifeSettlementEstimate.com, you can be confident that we connect you only with licensed and vetted buyers and brokers who meet Illinois's regulatory requirements. Verifying licensure is a critical first step before entering into any life settlement transaction — and one we handle on your behalf.
Waiting Period Rules in Illinois
Illinois requires a two-year waiting period from the date a life insurance policy is issued before it can be used in a life settlement transaction. Exceptions apply for terminal and chronic illness and other qualifying circumstances.
Consumer Protections for Illinois Residents
Illinois requires life settlement providers to give sellers written disclosures and provides sellers with a rescission period following contract execution. These protections are designed to ensure that Illinois policyholders can evaluate life settlement offers without undue pressure.
What Your Policy Might Be Worth in Illinois
Life settlement offers vary widely based on individual circumstances. As a general industry benchmark, policyholders typically receive offers ranging from 10% to 30% of the policy's face value — and in some cases more, depending on the insured's age, health status, policy type, and premium obligations.
For example, a $500,000 policy in Illinois could potentially generate a life settlement offer between $50,000 and $150,000 — compared to far less (or nothing) if the policy were simply lapsed or surrendered. These are industry-typical ranges and not guarantees. Your actual offer will depend entirely on your specific circumstances.
Important Disclosure
The ranges provided are general industry estimates and educational in nature. No specific payout is guaranteed. Actual offers depend on your policy details, health information, and buyer demand at the time of transaction. LifeSettlementEstimate.com does not guarantee any specific offer amount.
The best way to get an accurate picture of your policy's potential value is to start with a free, no-obligation estimate.
Tax Considerations in Illinois
Illinois has a flat state income tax rate. Life settlement proceeds above the policy's adjusted basis may be subject to this tax in addition to federal income taxes. Illinois residents are encouraged to consult a qualified tax professional.
Tax Disclaimer
The above is general educational information and does not constitute tax advice. Tax laws are complex and subject to change. Please consult a licensed CPA or tax attorney before completing any life settlement transaction to understand the full tax implications of your specific situation.
How the Life Settlement Process Works
Get a Free Estimate
Use LifeSettlementEstimate.com to receive a preliminary valuation of your policy. There's no personal information required beyond the basics, and no obligation to proceed.
Submit Policy Details
If you decide to move forward, you'll submit your policy information and complete a brief medical authorization. Our team gathers records and prepares your file for buyers.
Receive Competitive Offers
Your policy is presented to our network of 50+ licensed buyers in Illinois and across the country. Multiple offers are collected and presented to you for comparison.
Accept or Decline
You are never obligated to accept any offer. If you accept, the closing paperwork is handled, and funds are typically received within 30–60 days of final approval.
See our full How It Works guide for a complete walkthrough of the life settlement process.
Why Use LifeSettlementEstimate.com in Illinois?
LifeSettlementEstimate.com was built around one core principle: policyholders deserve transparent, unbiased information before making a major financial decision. We are an educational-first platform, not a high-pressure sales operation.
For residents of Illinois in cities like Chicago, Aurora, and beyond, our platform offers a compliance-first approach — connecting sellers with licensed, vetted buyers who operate within Illinois's regulatory framework.
Free Estimate
No cost to get your initial policy valuation
No Obligation
You decide if and when to proceed
50+ Vetted Buyers
Competitive offers from licensed IL buyers
Compliance-First
HIPAA-compliant, fully transparent process
A Illinois Resident's Story
Ruth Kowalczyk, 75
Naperville, Illinois
"Ruth, a retired nurse from Naperville, had a $500,000 universal life insurance policy she had maintained for over 30 years. With her husband having passed and her children financially independent, she began questioning whether the significant annual premiums were the best use of her retirement savings. Her financial advisor suggested she explore a life settlement, and Ruth started with a free estimate at LifeSettlementEstimate.com."
This is a fictional illustrative scenario. It does not represent an actual client or guaranteed outcome.
Frequently Asked Questions — Illinois
Get a Free Life Settlement Estimate in Illinois
Ready to find out what your policy may be worth? Our free estimate takes just minutes — with no obligation, no pressure, and no cost. Join Chicago and Joliet residents who have already used LifeSettlementEstimate.com to make informed decisions about their life insurance.
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