Many individuals researching life settlements ask whether Coventry Direct, a well-known life settlement company, buys term Insurance policies. This page explains the eligibility, process, and important considerations related to Coventry Direct and term life insurance settlements, including market rules and official guidance for U.S. policyholders.
Direct Answer
Coventry Direct does purchase term life insurance policies, but only under certain conditions.
The term policy typically must be convertible to a permanent (whole or universal life) policy to qualify for a life settlement.
Eligibility depends on the policyowner’s age, health status, and policy details such as face value and duration.
Life settlements generally target insureds aged 65 or older or those facing serious health conditions.
The cash offer for a term policy—if accepted—will be less than the death benefit and is subject to underwriting review.
The process involves assessing policy conversions, reviewing coverage limits, and verifying current ownership and premium requirements.
This process can vary by state and is not guaranteed; all offers are conditional on policy acceptance by Coventry Direct or any third-party life settlement provider.
Who This Policy Is For & Eligibility
Policyholders who own term life insurance and are considering selling their policy due to changes in financial needs or health status.
Individuals, usually age 65 or above, or those with significant health changes that impact life expectancy. Some settlements may be possible for younger insureds with serious illness.
Term life policies must often be convertible to a permanent form (whole or universal life) to be eligible for a settlement with Coventry Direct or similar buyers.
Ownership must be clear, and premium payments must be up to date. Lapsed policies are generally ineligible.
Each settlement provider, including Coventry Direct, may have specific minimum face value requirements, which can be sample/illustrative (often $100,000 or more).
State life settlement regulations and licensing rules vary; check with your state insurance department (see below for official links).
Educational Note: Verify current eligibility, licensing, and process details via official authorities or your state insurance department, as rules and provider participation can change over time.
Key Facts (At-a-Glance)
Item
Details
Policy Types
Term (usually only if convertible), Whole Life, Universal Life
Premium
Policyholder continues to pay until sale is finalized; buyers assess ongoing premium due
Conversion Feature
Must typically be convertible to permanent insurance to qualify
Minimum Face Value
Often $100,000+ (sample/illustrative; varies by provider)
Settlement Payout
Lump sum less than death benefit; varies by age, health, policy parameters
Medical Underwriting
Yes, medical records and health evaluation are usually required
State Regulations
Provider must be licensed; consumer protections vary by state
Taxes
Settlement proceeds may be taxable; check IRS life insurance tax guidance (official resources)
Pros
Provides access to cash from a policy no longer needed, without waiting for the death benefit.
May offer more value than surrendering or letting a policy lapse, especially for those with declining health.
Can fund alternative expenses such as retirement, medical bills, or long-term care.
Removes obligation for future premium payments once the sale is completed.
Life settlement market is regulated in many states to offer consumer disclosures and cooling-off periods.
Cons
Settlement amount is typically much less than the policy’s face (death benefit) value.
Offers are not guaranteed; eligibility rules are strict and carriers must agree to conversion if the term policy is not permanent.
May have tax consequences—portion of proceeds above basis can be taxable income; consult IRS or a qualified advisor.
May impact Medicaid eligibility, government assistance, or other financial programs.
Buyer (such as Coventry Direct) becomes new policy owner and beneficiary, receiving the death benefit when the insured passes.
Not all states allow or regulate life settlements the same way; consumer protections can vary.
Costs & How Pricing Works
The “quote” for a term policy is derived from a combination of factors: insured’s age, health status, policy size, premiums, and whether conversion to permanent insurance is possible.
If the term policy is not convertible, Coventry Direct and similar providers are unlikely to buy it.
Ongoing premiums, conversion premiums, and administrative fees are assessed as part of the settlement offer.
Underwriting reviews medical records to estimate life expectancy, which strongly impacts the offer.
Life settlement brokers or providers may charge fees or commissions; always compare and review all disclosures.
Sample illustration: An 80-year-old with a $250,000 convertible term policy in declining health may receive a settlement offer ranging from 10% to 30% of face value, less any fees (not a guarantee; actual offers can be higher or lower based on circumstances).
Consult the “IRS life insurance tax information (official homepage)” for current treatment of settlement proceeds: IRS official homepage
Process: How Coventry Direct Buys Term Insurance
Initial Inquiry: Policyholder submits policy details, health records, and consent for review.
Eligibility Review: Coventry Direct checks for conversion ability, face value, and required state/legal compliance.
Medical Underwriting: Full health assessment and life expectancy estimate to inform pricing.
Offer and Acceptance: The company presents a settlement offer if qualifying criteria are met; offers vary and are non-binding until contracts are signed.
Conversion (if needed): If the term policy is converted, permanent coverage replaces the term policy before or upon sale.
Sale Finalization: Contracts are reviewed according to state law; funds released to the policyholder after all documentation is complete.
Post-Sale: Buyer pays premiums and becomes beneficiary; original owner and beneficiaries surrender rights to the policy.
Regulatory Overview & Consumer Protections
All reputable life settlement companies, including Coventry Direct, must be licensed in your state to offer or buy life insurance policies. Check with your NAIC consumer resources (official) for guidance.
States may impose minimum waiting periods, mandatory disclosures, and cooling-off rights for sellers.
Life settlements are not available in all states, and some states heavily restrict the types of policies and sellers eligible.
Alternatives & Comparisons
Letting the policy lapse: Results in no payout. Consider only if settlement or surrender value is not possible.
Surrendering the policy (possible for universal/whole life but not for most term policies): The insurer pays the policy’s cash surrender value, if any.
Accelerated death benefits: Some policies allow early payouts in the case of terminal or chronic illness.
Retaining the policy: Keeping coverage in force for family/beneficiaries, if premiums are sustainable.
Third-party sales to other settlement companies: Offers and terms vary—compare fees, consumer protections, and licensing.
Side-by-Side Comparison
Feature
Sell to Coventry Direct
Let Policy Lapse
Convert & Keep Coverage
Coverage Scope
Policy sold for lump sum; coverage/benefit goes to buyer
No coverage; potential loss
Coverage changes to permanent; stays with insured
Typical Premium
Ongoing until sale closes; stops after sale
None (after lapse)
Usually higher after conversion
Deductible
Not applicable
Not applicable
Not applicable
Exclusions
May be ineligible if not convertible or too small
No exclusions (policy lapses)
Conversion available only if policy allows
Claims Process
Medical review, sale contracts, disclosures
No claims (policy ends)
Standard insurer process
Frequently Asked Questions
Can I sell any term life policy to Coventry Direct?
No; it typically must be convertible to a permanent type (whole or universal life) for Coventry Direct to buy it.
If a term policy is not convertible, a life settlement is usually not possible.
Most settlement providers have a minimum face value; sample/illustrative minimum is $100,000, but confirm with the provider.
Do I need to be a certain age to qualify?
Most successful life settlements are for insureds age 65+, though serious health conditions may qualify younger people.
The older the insured, or the shorter the life expectancy, the more likely a term policy can be sold.
Exact age/health criteria are subject to underwriting and vary.
What if my term policy has already lapsed?
Lapsed policies generally cannot be sold in a life settlement.
Timely premium payments and active status are usually required for consideration.
If lapsed recently, conversion rights (if available) may offer a brief window for reinstatement and sale; check with both the carrier and settlement provider.
How is the cash offer determined?
Offers are based on insured’s age, health, policy type and size, conversion rights, and projected premium costs.
Life expectancy assessment is the primary factor—shorter life expectancy generally increases the offer.
All offers are net of future premiums and any provider/broker fees.
What official protections do I have when considering a life settlement?
State insurance departments regulate most life settlements; licensing, disclosure, and cooling-off periods are common.
This content is for educational purposes only. It is not insurance, legal, or tax advice.
Policy terms, eligibility, and pricing vary by state and insurer; verify details on official sources.
Conclusion & Next Steps
Coventry Direct may buy term life insurance policies, but eligibility is restricted to policies with conversion options and other criteria.
All life settlement offers are conditional and subject to detailed underwriting, state law, and provider discretion.
Policyholders should confirm provider licensing, review all settlement and tax implications (IRS life insurance tax guidance: IRS official homepage), and understand consumer protections before proceeding.
