Great question. A life insurance buyout is just another way of saying a a life settlement, which is the technical term for the process of selling your life insurance to a third-party investor if you no longer want or can afford it. A settlement a somewhat-simple transaction that pays the policy owner (you) an upfront cash payout, or a yearly payout. For this payout, you assign the policy to the buyer so that they own the policy and collect the death benefit at a future date when you pass away.
Most people who pursue a life settlement do it if they have a life insurance policy which you no longer want, need or can afford. This article summarizes the important things you need to know about a life insurance buyout.