Maximizing the Value of Existing Life Insurance Policies

By Doug Himmel, Managing Partner, Melville Capital, LLC

Estate planning is evolving—rapidly and substantively. Between anticipated changes to exemption thresholds, increased scrutiny on charitable giving, and economic headwinds that are reshaping how individuals and families access liquidity, today’s environment calls for flexibility and creativity across the board. For professionals supporting high-net-worth households—whether through estate design, succession planning, family office services, or corporate advisory—this means taking a closer look at every asset on the table, including existing life insurance policies that may no longer serve their intended purpose. 

Often overlooked or surrendered outright, these policies can be repositioned through a life settlement to unlock meaningful liquidity. According to the Life Insurance Settlement Association, in 2024, life settlement payments have averaged over 6.5 times more than the policy’s cash surrender value—translating into nearly $223,000 in additional value for eligible policyowners¹. 

That kind of unlocked value can change the dynamics of a financial plan—particularly when traditional liquidity sources are already spoken for. In that context, the goal isn’t to replace tax or estate planning. The goal is to enable it—funding charitable intent, smoothing estate equalization, supporting succession and exit strategies, or injecting capital into an otherwise illiquid transition. 

Planning with Purpose—While Clients Are Still Living 

Estate planning today is no longer just about what happens after death. For many households, it’s about creating impact while they’re still here. That might mean structuring gifts to family, funding philanthropic vehicles, preparing for succession, or simplifying an estate in real time. 

Some advisors call this shift “life planning.” And it’s especially relevant for clients who want to retain agency over how their wealth is used. By converting an unwanted or underperforming life insurance policy into cash, families gain the ability to act now—without waiting for a death benefit or liquidating market assets². 

Whether the goal is to contribute to a donor-advised fund, rebalance wealth across heirs, or prepare for a business transition, liquidity created through a life settlement can support those moves—while the client is still able to lead the conversation. 

Succession and Exit Planning Need More Than Just a Timeline 

For business owners, the path to transition isn’t always linear—and it rarely happens automatically. Succession and exit planning are often used interchangeably, but they serve distinct purposes: succession focuses on who will take over leadership, while exit planning addresses how the owner will step away from the business and access its value³. In practice, both often unfold in parallel—and both require liquidity, structure, and coordination among advisors. 

This is where existing life insurance deserves a closer look. In a succession planning context, long-held key-person policies may no longer reflect the future leadership structure or needs of the business. Rather than let those policies lapse, advisors can help clients evaluate whether they qualify for a life settlement—creating liquidity that can support leadership transitions, retention strategies, or family equalization. In exit planning scenarios, unused buy-sell or legacy corporate-owned policies may be leveraged to help fund buyouts, prep for ESOP conversion, or support the owner’s personal liquidity needs post-transition. 

In either case, the business itself is often the client’s largest asset—and insurance linked to that asset is too frequently overlooked. By identifying and unlocking value from existing policies, advisors can help owners enhance flexibility, smooth handoffs, and improve outcomes—without disrupting core operations or investment strategies⁴. 

Bringing It Together: Where Life Settlements Fit 

While life settlements aren’t a solution for every client or policy, they continue to prove valuable across a growing number of advisor-led strategies. In estates that require equalization, in plans anchored by charitable intent, and in transitions where liquidity is needed to unlock or transfer ownership—repurposing an existing life insurance policy can provide flexibility where it’s otherwise lacking. 

What ties these strategies together isn’t the structure—it’s the intention: to align financial decisions with life goals. For those who qualify, a life settlement isn’t just a transaction; it’s a planning lever—one that helps advisors and families bring liquidity, clarity, and optionality to some of the most consequential decisions they will ever face. 

For professionals across estate, tax, business, and philanthropic planning, revisiting existing life insurance can open new doors for liquidity, generosity, transition planning, and lasting impact. 

Footnotes: 

1. Life Insurance Settlement Association – FAQs https://www.lisa.org/learn-life-settlements/faqs/ 

2. Financial Advisor Magazine – Estate Planning Should Start with Conversations About Life https://www.fa-mag.com/news/estate-planning-should-start-with-conversations-about-life--not-death--robert-laura-said-84116.html 

3. Exit Planning Institute – Exit Planning vs. Succession Planning https://blog.exit-planning-institute.org/exit-planning-vs-succession-planning 

4. Financial Planning – Business Owners and Retirement Planning https://www.financial-planning.com/news/business-owners-and-retirement-planning-key-considerations 

   
   

About Us: 

Melville Capital, LLC is an independent broker and strategic advisor with over 20 years of experience in the life settlement market. We are focused exclusively on maximizing the value of existing life insurance policies in the secondary market for policyowners, offering an impartial process designed to optimize value with integrity. Since 2005, our team of licensed insurance professionals has represented individual, trust, corporate, and institutional sellers—providing solutions ranging from single-policy to complex portfolio sales and handling all aspects of the transaction. We cover the market efficiently, so you don't have to.