When representing a client, any good independent life insurance producer should take the time to find the best solution to fit their client’s needs. In order to fulfill this responsibility, producers typically cast the widest net possible to find the right product at the right price point to make the client happy.
When producers enter into the life settlement market, many continue to utilize this familiar strategy. While this is a successful strategy when representing a client in other avenues of the insurance industry, this is not the case for life settlements.
Compared to other branches of the insurance industry, the life settlement market is an extremely small community. During the origination process, a producer may work with a life settlement broker to obtain an offer from a life settlement provider. The life settlement broker sends the potential life insurance policy to as many life settlement providers as possible in order to negotiate the highest possible offer for the seller. While it seems to make sense to use many life settlement brokers to get the policy in front of as many life settlement providers as possible, this is not the case.
What Your Peers Are Reading
As a regulated industry, there are no secrets to who is and who is not a life settlement provider. Due to this openness, any reputable life settlement broker both knows and works with all life settlement providers. When a producer works with multiple life settlement brokers, the life insurance policy will be submitted to the same providers multiple times. This is problematic and can potentially cost the policyowner money.
On a daily basis, life settlement providers receive a large volume of policies to process and evaluate. Many factors go into which policies will receive a bid and which will not. Aside from the quantitative aspect of this process, the life settlement provider also weighs the likelihood of a successful closing process. A file that has been received many times shows a lack of control by the life settlement brokers. Many life settlement providers enter low bids or pass all together on files they may have otherwise bid on due to the apparent lack of control and the potential delayed closing these files usually create. In the eyes of the life settlement provider, receiving the file from multiple brokers is indicative of a longer closer time due to a lack of ability to obtain documentation from the seller.