Identifying a life settlement firm to settle a policy and minimize pitfalls

Your clients may not always have enough information or knowledge to make the best decisions about their financial objectives, but it’s still your job to ask the hard questions and protect their interests at all times. As an advisor, it is important that you take the time to ask questions when selecting an ideal a firm to conduct the life settlement transaction. Some of the questions to consider include:

  • Are they a member of the Life Insurance Settlement Association?

  • Are they fully licensed or do they use borrowed licenses?

  • Do they have a fiduciary responsibility and to whom?

  • How long has the company been in the life settlement industry?

  • Can they provide a copy of its state-approved anti-fraud plan?

  • Will they disclose gross offers, including commissions?

  • Do they sell policies to institutional buyers that are members of LISA (not individual investors)?

  • Do they have any ownership interest in any other life settlement companies?

  • Do they buy polices for their own investment portfolio?

  • Have any of the principals or their team been involved in any legal/litigation issues that should be disclosed?

  • Do they provide E&O coverage?

  • Is a recession period offered and are escrow services used, even in states with no requirements?

  • Have they ever had a licensed revoked or suspended?