Here's When Hiring A Life Settlement Broker Makes Sense, And How To Speed Up The Process

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The strategy for selling a life insurance policy is not ‘one size fits all.’ 

Many policies can be sold quickly for limited cash payouts at any time to companies that purchase life insurance policies directly. In other cases, policies can be significantly more valuable than the policyholder realizes. It’s times like these when you might consider hiring a broker to secure the highest offer possible.

So, before you begin the life settlement process, it pays to study the market. Determine which path is best for you. 

For example, if a policyholder is in their 60’s with only minor health problems, their policy can likely be sold for a limited amount of money directly to a large company.  However, in cases where the policy is over $250K, and the policyholder is living with significant health impairments like cancer, it’s almost always a better idea to hire a broker.

Policies That Attract The Most Buyers

Some policies have special circumstances that make it more qualified for an auction-like bidding process from private investor groups. These policies should not be sold directly to a large settlement company. 

These “auctions” are reserved for only the most valuable policies. What typically happens is that buyers will compete and bid for the policy, driving the price up. 

Characteristics of policies that get significantly greater returns: 

  • The policy has a face value of more than $250K
  • The insured person is over 75 years old, or
  • The insured person is living with significant health impairments like cancer

If your policy fits this description, it certainly makes sense to speak with a broker. 

life settlement brokers

A Life Settlement Broker Process That Pays

Your broker is actually financially invested in you. 

Throughout the process, fees to gather the required documents total $2,500-4,000. These fees are paid by the brokerage. This ensures the broker is interested in securing the highest return possible, just like you.

It also means that brokers won’t waste time and money marketing your policy if a life settlement isn’t actually a promising option for you. 

Gathering And Studying Documents Required To Market The Policy

In the beginning, there’s a bit of work needed to gather the required documents before going to market. These will help verify the worth of your policy to potential investors. Your broker will read over policy for any riders or benefits that will affect how much you can get from the policy. 

They will also work to collect medical records from your providers that will display your current and past health conditions. As well as a report on your current limitations and ability to complete daily tasks. 

Bringing The Policy To Market, Managing The Auction

It may make sense for the policy holder to cease shopping companies once a policy is ready for the marketplace.  The life settlement marketplace does not want to see your policy being shopped by multiple companies. It creates instability and uncertainty which can spook them, and ultimately limit the final offer you receive. 

Securing The Highest Offer And Closing The Deal

Once the auction has started, the broker will work to find you the highest offer possible. They spend time fielding phone calls and emails letting buyers know why they should purchase your policy. 

Once the final bid is submitted and all others have pulled out, the policyholder then has the final say in accepting the deal. Once you accept an offer the funds are moved to an escrow account. Closing documents will then be prepared and signed. Once everything is finalized the funds will be released to you in full.

Everybody Wins, Except The Insurance Companies

Everyone wins when a policy sells in a broker auction. 

  • The policyholder almost always secures a significantly higher cash offer and is relieved of their monthly/annual premiums
  • The broker recovers their invested funds and a commission.

The only party that is not too happy is the life insurance company.  They are most profitable when policies lapse. In a life settlement, they will now have to pay the new beneficiary at some point.

Situations Where You Might Not Need A Broker

The life settlement industry has grown a lot in the last decade. There’s a lot more information and transparency available for everyone involved in the transaction. 

Some policies are certainly qualified for sale, but they won’t see the bidding war that other qualified policies will. So, after speaking to a broker, it might make more sense to skip the broker process altogether. 

In these situations, the difference between the broker and direct buyer is less significant. After paying the broker you may find that both options had similar financial outcomes.

Do You Need To Sell Your Policy Quickly?

If time is a critical factor, it may seem like skipping the broker’s auction makes sense. However, a policyholder may still be able to take advantage of the auction process while still selling their policy quickly if they gather the necessary documents on their own. Though a broker can certainly acquire these documents on your behalf, insurance companies and medical providers will certainly expedite the process working with you directly. This will reduce the time required for the life settlement process by 30-60 days 

life settlement broker

When You Need A Good Strategy

Policies with greater potential need a good strategy. A broker makes sure these policies are presented with their full value on the table. Their goal is to get the most out of your policy. Especially when compared to the large settlement companies. The goal for these sort of companies is always to secure policies for the lowest amount possible.

Brokers have experience selling policies with large price tags. They won’t let your policy go for less than it’s worth. 

If you’re considering a life settlement, you can always start with a life settlement calculator. This will give you an idea of how much your policy is worth. 

Then reach out for a free consultation to discuss your options.

Windsor Life Settlements

Windsor Life Settlements

If you're over age 70 or living with significant health impairments, don't allow your policy to lapse or settle for low offers from insurance companies until you get a quote from a life settlement broker.

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