The question was: My first settlement transaction attracted only two bids, and both were close in dollar amount. Is that what I should expect on settlement transactions, or do most cases typically attract more bids and that differ significantly in amount?

The answer is: When a policy is sent out to the market for bids, what one should expect is all over the board.

First of all, the market is constantly evolving and the variety of settlement outlets have “different money” at different times. What I mean by that is the settlement outlets have to work within the parameters of those putting up the money. Different sources of money may be looking for different types of policies at different times.

Also, the carrier, the type of policy and the jurisdiction of the policy can have a dramatic affect on the market response. Some sources of money will bid on only policies of a certain size or policies on lives within certain life expectancies. Some sources will bid on survivor policies and others will not. Some will bid on whole life or variable life and others will not. Policies domiciled in states with stringent licensing requirements for funders to operate will result in fewer offers than unregulated states.

A $1,000,000 universal life policy with low cash value and a reasonable premium to hold the policy to maturity from a high quality insurance company on an 82-year-old man with serious health issues in a state with no regulation will undoubtedly garner many times the number of offers as a $150,000 survivor variable universal life policy with with a ‘B’ rated carrier on a 70-year-old couple in a state with tough guidelines. On one case you may have the market tripping over itself to get the case and on the other, the phone may never ring.

Bill Boersma
Opportunity Concepts
President
Grand Rapids, Mich.
bill@opportunityconcepts.com