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Life Health > Life Insurance

7 questions for advisors to ask when selecting a life settlement firm

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A growing number of American seniors are discovering the hidden value in an important asset — their life insurance policies. As this awareness grows and seniors understand they may be able to sell a life insurance policy they no longer need or can afford through a life settlement transaction, they’re likely to turn to their trusted financial advisors for advice about how to proceed.

To better prepare advisors for how to meet the needs of clients who have questions about life settlements, this year the Life Insurance Settlement Association (LISA) created a new website:

The site includes a section dedicated to Consumer Advisors that serves as a free information resource for financial advisors, insurance agents, accountants, attorneys and other professionals who are in a position of providing counsel to seniors and their family members regarding important financial planning decisions. These resources can help advisors determine which clients may be good candidates for life settlements and which clients may be better served with other solutions.

For those advisors who feel a life settlement may indeed be an appropriate financial planning option for one of their clients, it’s important to work with life settlement professionals who are knowledgeable about these transactions and well-equipped to serve the needs of both seniors and their trusted advisors. Selecting a life settlement representative may involve either selecting a “life settlement broker” or a “life settlement provider” to assist with the process.

A life settlement broker takes on the responsibility of acting in the best interests of the client selling the policy. A life settlement provider is a company that enters into a contract to purchase the policy from the owner.

While the LISA website provides a list of members who are subject to a set of ethical standards of practice and annually attest to abiding by life settlement laws and regulations, how does a consumer advisor select someone from the list of members that best fits the needs of their client? One recommendation would be to interview at least two candidates.

This interview process might include asking a few basic questions, such as the following:

1. How long has your firm been in the life settlement business, how many professionals does it employ and how many years of experience does its top management have in the business?

2. Is your firm fully licensed in jurisdictions where it conducts business and has the firm ever been convicted of violating any life settlement regulations in any jurisdictions?

3. Has your firm ever been sanctioned by LISA for violations of its Code of Ethics and Standards of Professional Conduct?

4. While acting on my behalf, will you provide me with total disclosure of all information and interaction among providers with whom you are negotiating a sale price for my policy?

5. How is your compensation determined, does it come out of the proceeds of selling my policy and who pays it? Likewise, will I know if there are any other parties to be compensated for selling my policy and how much their compensation will be?

6. Will you keep me informed about the progress of the sales transaction at specific times?

7. Will you provide me with any references to previous clients for whom you have successfully completed transactions?

Of course, the most important consideration is feeling comfortable about doing business with a firm whom you are confident is working in your best interest, possesses a high level of integrity and — at the end of the transaction — you would recommend to another client.

To consult the LISA online database and find a LISA member, go to or call (888) 499-0933.


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