It's also important to comparison-shop. Flagg once worked with a client once whose broker presented her with only one offer. When Flagg asked the middleman to check with more life-settlement companies, a significantly better deal was found.
"It's an advisor's job to take the steps necessary to make sure the client can sell the policy for as high an amount as possible," said Flagg, whose company serves a sub-advisor to life insurance trusts.
If you work with a broker or advisor, make sure the person gets a complete list of purchase offers from all eligible buyers. Licensing of life-settlement companies is done at the state level, so you could check with your state's insurance department to see how many providers there are.
It's also possible to sell the policy while retaining some of the death benefit. For illustration purposes: Say you have a $1.5 million dollar policy and only need to leave $500,000 to your beneficiary. You sell the other $1 million in exchange for retaining that amount for your heir.
Remember, though, selling is only one option.
"If the premiums get burdensome but it makes sense to keep the policy for the death benefit, you could ask your beneficiaries to cover the premiums on the policy for you," said Forster at Nxt:Gen Financial Planning.