Often confused with viatical settlements, life settlements are the sale of a life insurance policy by a policy owner for less than the face value but more than the cash surrender value of the policy to a third-party investor. Life settlements were designed to maximize the resources of the policyholder and to empower the policyholder with choices. Unfortunately, studies indicate that agents do not discuss this underutilized tool with clients because a lack of knowledge and understanding.
With more than 75 percent of agents offering a life settlement to less than 20 percent of clients and only
4 percent discussing this option with more than 90 percent of their surrendering clients, the life settlement industry is largely untapped and ripe for agent implementation.
The vast majority of the public has no idea life settlements even exist, and most troubling is those who could benefit most from life settlements are either completely unaware of their existence or are poorly represented, resulting in uninformed decision-making. The upside is 67 percent of agents say they would be happy to discuss a life settlement with any client who met the appropriate qualifications. This is great news for seniors, as they find themselves more unprepared for retirement than ever before, needing extra resources to cover health care costs and basic living essentials.
The life settlement transaction can be streamlined with the aid of a settlement broker. Life settlement brokers serve as go-betweens who bring together policy owners who seek to sell a policy and providers seeking to purchase them. Brokers, in exchange for a fee, will shop a policy
to multiple providers.