Chicago, IL Selling a life insurance policy for cash can be a difficult decision with many variables and potential outcomes to be considered on a case-by-case basis. However, there is one question that all seeking a life settlement must answer: “Should I sell my policy to a direct buyer or hire a life settlement broker?”
The answer is not always obvious but the difference is clear:
- Direct buyers enable policyholders to sell a policy quickly if willing to accept a lower offer.
- Life settlement brokers secure higher offers but require more time to allow for an auction and bidding process.”
For Example: A Recent Life Settlement Case
For example, a recent case of an insured with the following policy:
- Age: 85
- Face Amount: $650,000.00
- Health Status: Significant Impairments
- Offers from direct buyers reached 15% of the face amount or $100,000.00.
- After reviewing the policy using the life settlement calculator, this policy may secure offers between $208,000.00 and $468,000.00 if represented by a life settlement broker.
In this case, an insured who is 85 years old with medical impairments could secure a significantly higher offer by hiring a life settlement broker and allowing some time for an auction and bidding process to drive the offer price up.
However, should a person prefer to accept a lower amount in favor of a shortened process and faster payment, then an offer from a direct buyer would be the correct choice.
The Difference: Direct Buyers Offer Less, Save Time, Brokers Get Higher Offers, Require Time.
A direct buyer offers value to the life settlement market by saving the policyholder time. That is no small thing because many people seeking life settlements intend to use their life settlement funds for medical bills or emergency funds. So, when a person sells their life insurance policy for cash to a direct buyer, they bypass the standard 30-90 day life settlement timeframe normally required to sell most policies. Additionally, selling a life insurance policy to a direct buyer means there is no commission owed to a life settlement broker.
A life settlement broker works for you, the seller. A broker’s job is to get the highest possible offer for your policy by presenting the case to as many buyers or investors as possible. This approach of ‘leaving no money on the table’ is what Windsor strives for!
A life settlement broker gathers all the documents needed to bring a life insurance policy to market, where it can welcome bids and offers from multiple interested buyers. This process will typically yield a significantly higher cash offer for a life insurance policy.
Understanding all the options on the table is so important when seeking a life settlement. For some insureds, taking advantage of an Accelerated Death Benefit might be the best option. For other policy-owners, making a decision to go to direct buyers or a life settlement brokers can mean significant cash.
As a broker, Windsor Life Settlements will always obtain the highest possible bid through our ‘auction-type’ bidding process.