The question was: Is it acceptable to submit multiple policies on a client for one settlement transaction? If so, what considerations should I keep mind?
The answer is: Yes, it is quite common for an insured to sell more than one policy at the same time. There are a number of advantages to doing so.
Investors definitely prefer to diversify their risks and manage their portfolio, so several small policies are typically preferred over a single large policy. Yet the underwriting costs of considering several policies at the same time are lower than they would be if those policies were sold over the span of several years. Generally, investors will find multiple policies to be as good as or better than one large policy.
Additional considerations that the seller might want to bear in mind include:
1) The best overall offer may come from mixing and matching offers from several different investors. As the different buyers may have somewhat different processes, the paperwork could become tedious.
2) In most retail markets, “more is better,” but in life settlements I would not expect the investor to offer any sort of “volume bonus” for the fact that additional insurance is being offered for sale. By the same token, there would not be any sort of reduction in value offered either.
Steve Boger, FSA, MAAA
Boger & Associates
Buffalo Grove, Illinois