Lithium-ion Batteries (LiB) have a wide range of applications in daily life. However, as they get used over time, battery degradation becomes inevitable, which can lead to a drop in performance and a reduction in the battery’s cycle life. The State of Health (SoH) is widely regarded as the health indicator for the battery pack. In Electric Vehicle (EV) applications, the EV user defines the lower limit of SoH when they experience that the battery no longer supports the EV; at that point, the battery is said to be translated from first life to second life. The SoH estimations of Second Life Batteries (SLB) have plenty of uncertainties, such as the availability of battery’s previous history, non-uniform degradation in the EV application, variations in chemistry, and charging protocols defined by vehicle manufacturers, making the SoH estimation of SLB a challenging task. This paper discusses the equipment, timelines, computational complexity, health indicators, and list of parameters that need to be considered for the SoH estimation of SLB. The SoH estimation methods are classified into direct and indirect techniques. Direct assessment techniques involve cyclic ageing experiments followed by dismantling the battery for microscopic studies performed by previous researchers that were explained. Indirect assessment techniques include physical and chemical based approach, electrical, and Artificial Intelligence (AI)-based methods that estimate SoH indirectly through incremental, differential approaches and other parameters such as Integrated Voltage (IV) and Probability Density Function (PDF). Health indicator identifications play a vital role in indirect assessment methods to gain critical insights regarding battery degradation. The challenges involved in SoH estimation are categorized into equipment requirements, parameters, SoH accuracy and efforts required to compute SoH, which are discussed. Of all the SoH estimation methods, comparison of such methods in First Life Batteries (FLB) and SLB perspectives are discussed. To estimate the SoH of SLB, this paper explains all aspects, such as computational methods, filtering data, data sampling frequency, and the need for a specific algorithm to post-process the battery test data. Equipment availability and timelines are interrelated with the cost incurred in the SoH estimation of SLB. The efficacy and practicality of SoH estimation methods that are proposed for SLB is discussed. Overall, this paper provides necessary insights into the parameters required for SoH estimation and the computational and experimental methods that can be considered for estimating the SoH of SLB while some of the methods are applicable to FLB as well.