Life Settlement Brokers: Get The Most Out Of Your Policy

Life Settlement Brokers: Get The Most Out Of Your Policy

Offers are pushed higher when buyers compete for your policy.

Don't Settle For Low Offers From Insurance Companies

If an insurance company made you an offer that seems low, consider a quote from a licensed life settlement broker at Windsor. The brokers at Windsor have developed a private network of buyers that will actively bid for your policy.  In our experience, this bidding process consistently drives offers higher.  Get a quote today.

new regulations aim to increase transparency in the life settlement market

Life Settlement Brokers Secure Higher Offers

There are a lot of situations where you pay a professional to make sure a job’s done right. For example, building a house or filing taxes for a large business are not generally situations where you want to DIY. Life settlements are in this category. 

If your goal is to receive the largest payout for your life insurance policy, you would call a professional. In particular, life settlement brokers are the professionals you need to make sure you get the most out of your life insurance policy.   

Life Settlement Brokers VS Life Settlement Companies

There are situations where you may want to sell your policy to a company that buys directly from policyholders. These situations are when the goal is to get money fast. Especially if the priority is quick rather than receiving the biggest payout, this might be for you. 

If you decide to use a life settlement broker, you will pay them a fee with the money from the life settlement. This is due to the process that they go through to get you the highest payout from your policy. You put them in charge of preparing your policy for an auction-like bidding process. 

Gathering medical records and the information needed to prepare your policy will cost life settlement brokers $2,500-4,000. They’re financially invested in your case. This is how you know they will do their best work to get you the highest offer. 

Why Is The Payout Less When You Go Directly to a Life Settlement Company?

Life settlement companies will buy your policy for the lowest amount possible. In this situation, they aren’t financially invested in you getting a large payout. It’s in their best financial interest to make sure you don’t get too much money! As well as, they are not competing with anyone else to get your policy.

On the other hand, life settlement brokers put your policy on the market so you have competition among buyers. This drives the payout up but also takes more time.     

Your Life Insurance Company Wants Your Policy To Lapse

Life insurance companies benefit from lapsed policies. 88% of all universal life insurance policies are lapsed or surrendered. In this situation, the insurance company gets out of paying a death benefit. Basically, this is how they make their money. With life settlements, the insurance company has to pay a death benefit that they may have avoided. 

Consequently, life insurance companies resist the process of life settlements. Nevertheless, the best life settlement brokers help move the process along.

Does Everyone Know About Life Settlements?

A surprising number of people don’t know about life settlements. They have been paying for their policy for decades and have no idea selling it is even an option. If you’re working with a financial advisor, you may want to explore this option with them. Windsor has some great resources for financial advisors

You may also be wondering how life settlement taxation works. You can read all about it on this taxation page. Life settlement brokers are not tax experts but they are certainly a good resource. 

If the idea of selling your life insurance policy is new to you, you need to first find out if your policy qualifies for a settlement. 

Is Your Life Insurance Policy Qualified to Receive a Life Settlement? 

If you’re considering a life settlement, start by using a life settlement calculator to see if your policy qualifies for a settlement. Keep in mind you must have these three elements to qualify for a life settlement:  

  1. You must be at least 70 years old or have significant health impairments. 

  2. The face amount of your policy should be at least $100K. 

  3. The policy needs to be in force for at least 2 years, a few states require 5 years.

There are a lot of factors that determine how much your life insurance policy is worth. For more information on the factors that influence your policy’s worth check out What’s My Life Insurance Policy Worth? 

How Soon Do You Need The Funds?

When considering using life settlement brokers, determine how soon you need the funds from the sale. Situations where people need funds fast: 

In this case, you might want to sell directly to a company instead of using a life settlement broker. Generally, the process with a life settlement broker takes about 30-90 days.

Consultations With Life Settlement Brokers 

Consultations are always free so you don’t need to be sure about anything before you call. Life settlement brokers will help you map out the best path forward, even if that doesn’t include a life settlement. They don’t want to take on policies they don’t believe will easily sell for a high payout. Even though they are looking for clients, they won’t start the process if it’s not a smart or viable option for you. 

Questions a broker will go over with you:  

  • How much are the current premiums? Are the premiums increasing?

  • Are there any alternatives to consider? Such as an “accelerated death benefit” rider that could potentially be of more value than a settlement?

  • How significant if at all are the life settlement tax obligations?

Choosing The Right Life Settlement Broker

Once your broker has gathered the documents to list the policy, it goes out to market. Investors will actively bid on the policy driving up the price. This process in the market may take 2-4 weeks. 

Once life settlement brokers are financially invested, they may request exclusivity. This means you can’t hire another broker for the duration of the process.  Exclusivity is never required but appreciated and actually better for your case.  The life settlement community is small. When buyers see the same case being represented by multiple brokers it can spook them.

Attaining the Highest Offer and Closing The Deal

Your broker will find you the highest offer, and you’ll have the final say in accepting the deal. If you accept the offer, funds will move to an escrow account. Next, closing documents will be prepared to transfer ownership of the policy. 

Once everything is signed and finalized the funds will be released to you. You’ll receive the payout amount in full immediately.

Case Study: A Recent Life Settlement

For example, a recent case of an insured with the following policy:

  • Age: 85
  • Face Amount: $650,000.00
  • Health Status: Significant Impairments

The Offers

Offers from direct buyers reached 15% of the face amount of $100,000.00. 

After reviewing the policy using Windsor’s life settlement calculator, this policy may secure offers between $208,000.00 and $468,000.00. That is, if represented at an auction by a life settlement broker. 

In this case, an 85-year-old with medical impairments could secure a significantly higher offer by hiring a life settlement broker. Thus allowing some time for an auction and bidding process to drive the offer price up.

However, if a person prefers to accept a lower amount in favor of a shortened process and faster payment, then an offer from a direct buyer would be best.

The Results

Direct buyers offer less but save time. The best life settlement brokers get higher offers but require more time.

Life Settlement Broker Regulations By State/City

 

Life insurance settlement brokers are subject to regulations to ensure honest business transactions. States like California and New York are among some of the first states to regulate how life insurance brokerages operate. Windsor Life Settlements adheres to all State-level and Federal laws in regards to life settlements.

Life Settlement Brokers By State Life Settlement Brokers By City




Life Settlement Brokers Secure Higher Offers

A direct buyer offers value to the life settlement market by saving the policyholder time. Perfect for many people seeking a life settlement to fund medical bills or emergencies. So, when a person sells their life insurance policy to a direct buyer, they bypass the standard 30-90 day timeframe 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. We do this 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!