In most cases the sale allows the policy holder to get more than the cash surrender value in return for selling the policy.  The investors are betting that the insured will die soon enough for them to make a profit.  I personally would feel uncomfortable knowing that some stranger owns a policy on my life and stands to profit from my death and that the percentage of profit they earn is dependent on how soon I die.  Regardless, if you can get past this minor issue, life settlements are at least worth looking at.

Life settlements usually are attractive to investors if your health has deteriorated after you bought the policy.  For example, let’s say you bought a policy five years ago and you qualified for super preferred rates, but now you had a heart attack.  Your life expectancy now is much shorter than when you bought the policy.  Your policy would be worth more in the life settlements market after the heart attack.  The key to getting a good price is to make sure you shop and let investors bid for your policy.  Don’t settle for the first offer you get.