Get Cash for Life Contingent Structured Settlement Payments

Originally authored April 2020 by Stephanie Scamman. Updated and reviewed by the CSF Legal Editorial Team.

If you have been told your structured settlement payments are "life contingent" or "out of guaranteed period," you are not alone in wondering what that means for your options. Many of our customers come to us after another company told them these payments cannot be bought. That is not true. Life contingent payments can absolutely be sold for a lump sum, and CSF does it routinely.

What Are Life Contingent Payments?

Life contingent structured settlement payments are periodic payments that the annuity issuer is only required to make while a specified person (called the "measuring life") is still living. Unlike guaranteed payments, which are paid for a fixed number of years regardless of whether the recipient is alive, life contingent payments stop if the measuring life passes away before the payment schedule ends. These payments can be sold for a lump sum through a court-approved transfer process. This applies to both life contingent structured settlement payments and life contingent annuity payments, which are valued using the same actuarial framework.

Industry professionals sometimes call these "out of guaranteed period" payments, since they continue past the end of the settlement's guaranteed payment phase. Here is how it generally works: life contingent payments are valued based on when they are due and how old and healthy the seller is. Can we buy life contingent payments due in 2040 or beyond? Absolutely. Can we buy them if the measuring life will be 90 years old in 2040? Probably not. The age and health of the measuring life drive everything.

Many structured settlements are designed with both phases. For example, a settlement might provide $2,000 per month guaranteed for 20 years, followed by $2,000 per month for life. During the first 20 years, payments are guaranteed. If the payee passes away, a designated beneficiary continues to receive them. After that period, payments continue only if the payee is still living. Those are the life contingent payments, and they have no residual value to beneficiaries.

What Is the "Measuring Life" in a Life Contingent Settlement?

The measuring life is the person whose survival determines whether life contingent payments continue. In most cases, the measuring life is the same person as the payee, the individual who receives the payments. But this is not always true.

In some structured settlements, the measuring life may be a spouse or other family member. We worked with a couple recently who had life contingent payments from Pacific Life. Both were entitled to payments, but the payments would stop upon the death of the husband. He was the measuring life. That meant if the husband passed away first, the wife's payments would stop too. This is more common than people realize, and it changes the valuation entirely.

Buyers assess the measuring life's age and health to determine how long payments are expected to continue, not just the payee's. If someone other than you is designated as the measuring life, the valuation changes because the risk is tied to that person's life expectancy rather than yours. This is one of the reasons CSF asks about health and age during the quote process. It directly affects what your payments are worth.

How Life Insurance Affects Your Life Contingent Payment Offer

Because life contingent payments stop at death, buyers take on mortality risk when purchasing them. To manage that risk, many buyers require or strongly encourage the payee to obtain a life insurance policy that would pay the buyer if the measuring life passes away during the payment period.

When a life insurance policy is in place, the buyer's risk is substantially reduced. This typically results in a lower discount rate and therefore a higher lump sum for the seller. Getting a life insurance policy can meaningfully increase the amount of money you receive.

When life insurance is not available (for example, if health conditions make coverage impossible or prohibitively expensive), transactions are still possible. That said, the discount rate will be higher to account for the buyer's unhedged risk, which means a lower lump sum offer. We see this regularly and can walk you through both scenarios so you know exactly where you stand.

Many of our customers complete transactions without life insurance. It is not a requirement. If you are unsure whether a policy would help your situation, call us at (800) 317-3769 and we will run the numbers both ways for you at no cost.

How to Tell If Your Payments Are Life Contingent

The best way to determine whether your structured settlement includes life contingent payments is to review your annuity contract or settlement agreement. Different insurance companies use different language, but the concept is the same. Here are examples of life contingent language from major annuity issuers:

• MetLife: "and while the Measuring Life is living"
• American General: "Payments Only During The Lifetime of Measuring Life"
• Hartford: "$X monthly for life with the first 360 months guaranteed"
• Prudential: "for as long after that as the Measuring Life lives"
• John Hancock: "Life with Certain Annuity: $X for life, payable monthly, guaranteed for 30 years"
• Farmers New World: "Monthly payments for Life with 30 years certain"
• Symetra: "as long as the annuitant is alive"

If your documents include any of these phrases, or similar language referencing "for life," "while living," or "life with certain," your settlement includes a life contingent component. If you are unsure, CSF will review your documents at no cost and explain exactly which payments are guaranteed and which are life contingent.

Life Contingent vs. Guaranteed Payments

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Why Life Contingent Payments Are Harder to Sell

Many structured settlement purchasing companies either cannot or will not buy life contingent annuity payments or life contingent structured settlement payments. We hear this from customers all the time: "I called three companies and they all said no." The reason is straightforward. Life contingent payments carry actuarial risk. A buyer who purchases these payments is betting that the measuring life will continue living long enough for the payments to be collected. If the measuring life passes away, the remaining payments stop, and the buyer loses their investment.

This risk means that life contingent payments require specialized underwriting. The buyer must assess the expected payout period based on actuarial life tables, medical history, and other factors. Companies without experience in this area often decline these transactions altogether or offer unreasonably low amounts. We have seen competitors offer customers thousands of dollars less than what we ultimately paid for the same payments.

Unlike guaranteed payments, where valuation is relatively straightforward present-value math, life contingent payments require actuarial judgment. The expected duration of payments depends on mortality projections, which vary based on the measuring life's specific circumstances. This is why working with an experienced buyer matters. Get quotes from at least two or three companies before making a decision. We say that because we know what happens when people compare.

What Determines the Value of Life Contingent Payments?

The value of your life contingent payments depends on several factors that interact with each other in ways unique to this type of transaction:

• Age and health of the measuring life: The younger and healthier the measuring life, the more valuable the payments. This is because the buyer is more likely to receive them over a longer period. This is the single most important valuation factor for life contingent payments and what makes them fundamentally different to value than guaranteed payments. A 35-year-old in good health selling life contingent payments will receive a substantially better offer than a 65-year-old, all else being equal.
• When the payments are scheduled to begin: Payments that start sooner are worth more than payments starting decades from now. Say you have $1,000 per month of life contingent payments from MetLife starting in 2027. Those payments are worth considerably more than the same $1,000 per month starting in 2037 or 2047, because both the time-value discount and the mortality risk compound over longer periods. If you have sold guaranteed payments before, you may have noticed this same pattern: the sooner the payments are due, the more cash you receive.
• The annuity issuer's financial strength: Payments backed by financially strong, highly-rated insurers are worth more than those from lower-rated issuers because there is less counterparty risk. The financial stability of the company responsible for making payments directly affects what buyers are willing to pay.
• Administrative fees and transfer costs: Some annuity issuers charge administrative fees to process a transfer. These fees can range from $0 to over $3,000 and directly affect the net amount you receive.
• Third-party measuring life: If someone other than you is designated as the measuring life, the valuation changes significantly because the risk is tied to that person's life expectancy rather than yours.

Watch: Options for Selling Life Contingent Payments

Options for Selling Life Contingent Payments

You have the flexibility to sell all of your life contingent annuity payments or only a portion of them. You are not limited to an all-or-nothing decision. CSF works with customers to structure transactions that fit their specific financial needs. There are three common approaches:

1. Sell a specific number of future payments. For example, sell payments due in years 5 through 15 while keeping payments due in years 1 through 4 and years 16 onward. This allows you to maintain your current income while receiving a lump sum from future payments you are willing to part with.
2. Sell a portion of each payment. For example, sell 50% of each monthly payment for a set period while continuing to receive the other 50%. This provides an immediate lump sum while preserving ongoing partial income from those same payments.
3. Defer the sale. Keep current payments flowing now and sell only those due further in the future. This may be useful if your current income is sufficient but future needs are uncertain. You receive a lump sum today from payments you would not have received for years.

You can also choose to keep all of your payments. If you do not have an immediate need for cash, life contingent payments provide valuable long-term income security. There is no pressure to sell. Call us, tell us what you are trying to accomplish, and we will show you what the numbers look like for each option. A quote from CSF is always free and you are never under any obligation.

Why Experience Matters When Selling Life Contingent Payments

If you are shopping around your life contingent payments, you may have already discovered that this is harder than selling guaranteed payments. We hear it constantly: customers come to us after being turned down by one, two, sometimes three other companies. Life contingent transactions require actuarial assessment, life insurance coordination when applicable, and real experience pricing mortality risk. Most buyers simply do not have that.

Our team has funded millions of dollars in life contingent transactions across nearly every state, including payments due as far out as 2065. Yes, five decades from today. We have purchased life contingent payments from Transamerica, MetLife, AIG, New York Life, Prudential, Hartford, and many others with terms extending 30, 40, and 50+ years. These are transactions that most buyers refuse to touch. We take a great deal of pride in helping people get cash for payments that other companies said could not be sold.

What does this mean for you? It often means thousands of dollars more than what you think you might get or have been offered elsewhere. The pricing variance on life contingent transactions is much wider than guaranteed payment sales. That is exactly why you should get quotes from multiple buyers. We want to earn your business, and we are confident in what happens when people compare.

Why CSF Specializes in Life Contingent Payments

Catalina Structured Funding is one of the few companies in the industry that actively and regularly purchases life contingent structured settlement payments. We have closed more than 4,000 structured settlement transactions total, and life contingent deals are a core part of what we do. We are not learning on the job with your transaction.

We have dealt with every major annuity issuer, including MetLife, Prudential, New York Life, Hartford, AIG, Transamerica, and Pacific Life. We know their internal timelines, their paperwork requirements, and which ones move fastest. That operational knowledge is the difference between a transaction that closes in 30 days and one that drags on for months.

When you work with CSF on a life contingent transaction, you benefit from:

• Deep expertise: We know the right questions to ask, the documents required, and the contacts at every major insurance company to coordinate a smooth transfer. No delays, no surprises.
• Competitive offers: We pay thousands more to customers who bring us buyout offers from other companies. We have seen what competitors offer, and we consistently beat them.
• Cash advances: The court process takes time. We can put cash in your hands within days of signing paperwork, so you are not waiting empty-handed. We offer cash advances on nearly every life contingent transaction.
• Transparent pricing: The amount we quote is the amount you receive. Not a penny less. All costs are accounted for in the transaction. You never pay out of pocket.

The fastest way to find out what your life contingent payments are worth is to call us at (800) 317-3769 or fill out the form on this page. That gets you a direct line to our team, not a call center. There is no cost, no obligation, and no pressure. Do not have all the information on hand regarding your structured settlement? No worries. Call us and we will help you locate it.

You can also visit our structured settlements overview to learn more about the general process, use our structured settlement calculator to estimate your payout, or read our guides on how to sell a structured settlement and life contingent payments. CSF also buys annuity payments, lottery payments, and provides probate advances.