Life Contingent Payments: What You Need to Know Before Selling

Life contingent payments are structured settlement payments that stop when the recipient dies, unlike guaranteed payments that pay out for a fixed period regardless. These payments are harder to sell because buyers take on actuarial risk, but selling them is still possible with the right buyer. Understanding how they work helps you evaluate offers and protect your interests.

What Are Life Contingent Payments?

Life contingent payments are structured settlement payments that continue only as long as the measuring life, usually the person receiving the payments, is alive. Unlike guaranteed payments, which are paid out for a fixed number of years regardless of whether the recipient is living, life contingent payments stop when the measuring life passes away. The National Structured Settlements Trade Association defines these as payments contingent on the continued survival of the measuring life.

Many structured settlements have two distinct phases. The first is a guaranteed period, during which payments are made for a fixed number of years no matter what. If the payee dies during this period, a beneficiary receives the remaining payments. The second is the life contingent period, which begins after the guaranteed period ends. These payments continue only if the payee is still living, and they cease upon death with no residual value to beneficiaries.

How to Identify Life Contingent Payments in Your Documents

Review your annuity contract or structured settlement agreement carefully. Different insurance companies use different language to describe life contingent payments. Here are some common phrases to look for:

• 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"
• Symetra: "as long as the annuitant is alive"

If your documents include any of these phrases, your settlement includes a life contingent component. If you are unsure, send us a copy of your documents and we will review them for free.

Factors That Determine the Value of Life Contingent Payments

Life contingent payments are more complex to value than guaranteed payments because the buyer is taking on actuarial risk, the risk that the measuring life could pass away and payments would stop. Several factors influence the offer you will receive:

• Your age: Younger payees receive higher offers because the expected payout period is longer.
• Your overall health: Buyers assess actuarial risk. Serious health conditions can reduce the expected payout period and may lower offers.
• The annuity issuer: Different insurance companies charge different administrative transfer fees, ranging from $0 to over $3,000. This affects the net amount available for your lump sum.
• Whether the measuring life is a third party: If someone other than you is the measuring life, the valuation changes significantly.
• When the life contingent phase begins: Payments starting in the near future are valued differently than those beginning decades from now.
• Terminal illness: A terminal diagnosis substantially affects the valuation because the expected duration of payments is shortened.

Your Options for Life Contingent Payments

Option 1: Keep Your Payments

If you do not need cash now, life contingent payments provide long-term income security for the rest of your life. This may be the best choice if you have no pressing financial needs and value the predictability of regular income.

Option 2: Sell a Portion

You can sell some of your life contingent payments while retaining others. For example, you might sell the next 10 years of payments while keeping everything beyond that. This gives you access to a lump sum while preserving future income.

Option 3: Sell the Maximum Amount

If you need the largest possible lump sum, ask for a calculation of the maximum cash available based on selling all available life contingent payments. An experienced buyer can present multiple scenarios so you can make an informed decision.

Why Most Companies Cannot Buy Life Contingent Payments

Many structured settlement companies cannot or will not purchase life contingent payments because of the complexity involved. Valuing these payments requires actuarial analysis, and funding them requires partners willing to accept the longevity risk. Companies without deep experience in this area may decline to make an offer or provide quotes that significantly undervalue the payments.

Catalina Structured Funding specializes in life contingent transactions. Our team has funded millions of dollars in life contingent purchases across nearly every state, and we have the experience and financial partners to close these transactions efficiently and at competitive rates.

Case Example: How Life Contingent Payment Valuation Works

Consider a 45-year-old receiving $2,000 per month in life contingent payments from a MetLife annuity. The guaranteed period ended two years ago, so every payment from this point forward is life contingent, meaning they stop if the payee passes away.

Based on actuarial life tables published by the Social Security Administration, a 45-year-old male has an approximate life expectancy of 33 additional years. That means a buyer could reasonably expect to receive payments for roughly 396 months. At $2,000 per month, the total expected future payments come to approximately $792,000. However, the present value of those payments is significantly lower because a dollar today is worth more than a dollar 20 years from now.

A buyer will apply a discount rate, typically higher for life contingent payments than for guaranteed payments, to account for both the time value of money and the actuarial risk that payments could stop early. If the buyer applies a 12% discount rate, the present value of this payment stream might be approximately $180,000 to $220,000, depending on the specific actuarial model used. If the same $2,000 per month were guaranteed for 33 years, the lump sum offer would likely be substantially higher because the buyer faces no longevity risk.

This is why shopping around matters. Different buyers use different actuarial models, have different risk appetites, and work with different funding partners. Those variables can produce meaningfully different offers for the exact same payment stream.

Life Contingent vs. Guaranteed Payments: A Comparison

Factor	Guaranteed Payments	Life Contingent Payments
Payment duration	Fixed number of years regardless of life status	Continues only while the measuring life is alive
Risk to buyer	Low, payments are certain	Higher, payments may stop unexpectedly
Typical lump sum value	Higher relative to total payment stream	Lower due to actuarial risk discount
Buyer willingness	Most companies will buy	Many companies decline or undervalue
Typical discount rates	9% to 14%	11% to 18% or higher
Beneficiary receives payments if payee dies	Yes, for remaining guaranteed period	No, payments stop at death
Valuation complexity	Straightforward present value calculation	Requires actuarial analysis and health assessment

Do I Need a Medical Exam to Sell Life Contingent Payments?

In most cases, no. Buyers typically rely on actuarial tables and your age to estimate life expectancy. However, some buyers may ask basic health questions or request a brief health questionnaire. If you have a serious medical condition, you should disclose it because it affects the valuation. A reputable buyer will explain exactly what information is needed and why. You can also consult a financial advisor through FINRA's investor resources for independent guidance.

Can I Sell Life Contingent Payments If I Have Already Sold Guaranteed Payments?

Yes. Many sellers complete multiple transactions over time. If you previously sold your guaranteed payments and now want to sell life contingent payments, that is allowed. Each transaction requires its own court approval under your state’s Structured Settlement Protection Act. At Catalina Structured Funding, we routinely work with customers who have completed prior sales and need to structure a new transaction around their remaining payment stream.

Frequently Asked Questions

How much are life contingent structured settlement payments worth?

Life contingent payments are typically worth less than guaranteed payments because the buyer assumes longevity risk. A younger, healthy seller will receive higher offers than an older seller. Discount rates for life contingent payments generally range from 11% to 18%, compared to 9% to 14% for guaranteed payments.

Can I sell life contingent payments if I am over 60 years old?

Yes, but your age directly affects the offer. Buyers use actuarial life tables from the Social Security Administration to estimate how long payments will continue. Older sellers have shorter expected payout periods, which results in lower lump sum offers. Some buyers decline life contingent purchases for sellers above a certain age.

Do all structured settlement companies buy life contingent payments?

No. Many companies only purchase guaranteed payments because life contingent deals require actuarial analysis and specialized funding partners willing to accept longevity risk. Catalina Structured Funding specializes in life contingent transactions and has the experience and financial partners to close these deals at competitive rates.

What happens to life contingent payments if I become seriously ill?

Your payments continue as scheduled for as long as the measuring life is alive. However, if you are considering selling and have a serious health condition, you should disclose it to potential buyers because it affects the actuarial valuation. A shorter life expectancy reduces the expected payout period and may lower offers.

Can I sell just the life contingent portion and keep my guaranteed payments?

Yes. If your structured settlement has both a guaranteed period and a life contingent period, you can sell the life contingent payments separately while keeping your guaranteed payments intact. Each transaction requires its own court approval under your state's Structured Settlement Protection Act.

Get a Free Life Contingent Valuation

If you are considering selling life contingent structured settlement payments, the first step is understanding what they are worth. Contact Catalina Structured Funding for a free, no-obligation valuation, or call us at (800) 317-3769. We will review your documents, explain your options, and provide a written offer, with no pressure to proceed.