Suddenly, it seems like commercials and ads for life settlements are everywhere. And with this media blitz, there is growing misinformation as well. For example, a healthy 68-year-old female cannot sell her $500,000 universal life policy for $300,000. But, you owe it to your clients to be sure that they are aware of this option and that they have the facts to make good decisions.
The most important thing to know about a life settlement, and to be sure that your clients know, is that it is an alternative to lapsing or surrendering a policy.
With the economy turned upside down, your clients should be evaluating all their assets to see what to keep, what to reposition, what needs to be liquidated to pay for everyday living expenses and where they could find unexpected value. Yes, a life settlement is a creative way to find hidden value in a life insurance policy; however, your clients’ life insurance could also be the most valuable thing in their portfolio to keep, assuming that they can afford it, as the face amount will pass on to their beneficiaries no matter what the condition of the stock market.
Once someone has made the decision to sell their policy, it’s imperative that they know to go to someone that they trust to get them the maximum market value. Selling a policy is somewhat like buying a diamond. It’s a “blind item” and you have to trust the dealer! As your clients’ trusted advisor, you want them to come to you to help them with this transaction.
And, as your trusted life settlement resource, a good life settlement broker will fight to get your clients the most value. Here’s how we do that:
● Life settlement brokers are brokers, and, as such, they go to the marketplace of potential buyers to create an auction which forces up the price.
Recently, we have done several deals where we have had over 20 bids back and forth among providers (the brokers for the investors), squeezing out every last dollar of value. If your client’s policy goes to only one provider, there’s no incentive for that provider to pay top dollar as there’s no competition.