Life settlements represent an opportunity for your clients to liquidate assets when their policies are no longer needed, wanted, or affordable. Yet, some advisors may be unaware of what life settlements are and how to get the highest payout for their clients.
A life settlement company will represent your client’s goals and interests and negotiate the best deals from buyers. In this blog, we’ll list 3 reasons why you should consider working with one.
Life Settlement Providers - The Process
Some common reasons your clients may consider selling their policies are to replace lost income, pay for medical expenses or long-term care, avoid costly premiums or let their policy lapse.
If your client is eligible and no longer needs their policy, life settlements can offer much-needed funds. Many even sell for more than their cash surrender value.
Additionally, life settlement companies are extremely knowledgeable about the process of selling a life insurance policy for its cash surrender value. They provide added value to your client by answering questions and sharing informative materials. Companies ensure that your client has a very personalized experience through educating and catering to their personal goals. This beneficial relationship can instill the confidence your clients need when deciding to sell their policy.
Life Settlements Are Well-Regulated
The Grigsby v. Russell Supreme Court case described insurance policies as having all the traits of personal property and possessing the full functionality of an asset. This ruling makes life insurance equivalent to stocks, bonds, and other investment properties that can be freely transferred at the owner's will.
This decision set a precedent for life settlements, and the sector is now well-regulated, similar to other financial industries. Today, most seniors live in states with consumer protection laws and regulations for life settlement transactions. These regulations include:
- Requiring life settlement companies to be licensed in the state where your client lives.
- Providers must use approved forms and disclose every step of the process, such as policies, transactions, and risks involved.
- Life settlement companies are also required to protect the privacy of all parties.
With that said, if you have any doubts, the best way to ensure you are working with a reputable life settlement company, such as an authorized LISA member, is to contact them directly.
Life Settlement Companies and Their Clients
Life settlement companies are representatives and intermediaries between you and life settlement buyers and will take action with your client’s in mind. They understand the life settlements ecosystem and invest a considerable amount of time and resources to map out the most effective market strategy for your client’s policy.
Oftentimes, life settlement providers benefit your client by obtaining a higher price for policies than when policyholders deal with buyers themselves. In some cases, they can facilitate a bidding auction between buyers where policy sales exceed 800 percent of the anticipated value.
Life settlements are a viable and beneficial opportunity for your clients. With a reputable provider, such as an authorized LISA member, your client can remain confident that they are in good hands. At the end of the process, your client might just thank you for recommending working with a provider as it will have helped them gain the much-needed finances they’ve been looking for.
For more tips and tricks on the best ways to help clients with their life settlement policies, subscribe to the LISA advisor blog today.