When done correctly, life insurance settlements can be a win-win. For investors they offer a chance at a big payout. And for life insurance policyholders, a life settlement offers a chance to get a big chunk of change into your pocket.

But before you enter into a life settlement – on either side of the deal – there are 3 things you need to know:

1. The return on investment can be high
For investors, this is (by far) the biggest perk to handling life insurance settlements. Unlike the stock market, where you don’t know if you’re ever going to get a payout, all life insurance settlements eventually lead to a payout. The key is making wise decisions and limiting the amount of money that you have to spend to get there.

If you’re a life insurance policyholder, this is important for you to understand, too. By understanding exactly what an investor is getting out of the deal, you can negotiate a better upfront payment for yourself. This is especially true of a senior life settlement – where investors know that their payout is coming sooner rather than later. In fact, in a senior life settlement, the policyholder holds most of the cards. If the investor thinks the potential ROI is high enough, he may agree to just about anything!

2. There is no “right” answer

When it comes to life insurance settlements, things aren’t black and white. There is no right and wrong. No matter which side of the agreement you’re on, there is a lot of gray area. All you can do is learn as much about the process as you can and negotiate a settlement that works for you.

For example, in a senior life settlement, a policyholder might be holding out for more in a lump sum payment – so that he can pay off his extensive medical bills and not have to pass them along to his heirs. Or, he might be willing to take a little less money, just to get rid of the responsibility of monthly premium payments. Either scenario will have a huge effect on how the life settlement process goes.

3. Life settlement brokers can be a gift from the heavens
Whether you’re an investor who could use a little help or a senior citizen who is afraid to enter into a business deal all by yourself, life settlement brokers can be worth their weight in gold. They act like middlemen in life insurance settlements. They’ll work with both sides to negotiate a fair deal. Plus, they’re well-versed on the life settlement process, so they can answer any questions you might have.