It is possible to engage in a life settlement through either a broker or provider.

However, most settlements are conducted through a broker, who can then solicit multiple competitive bids on behalf of the insured. The advantage of working directly with a provider – which is only responsible for its own bid – is that intermediaries are eliminated from the process. The ultimate goal is to obtain the best possible settlement on the best possible terms. 

Life Settlement Brokers:

• Connect the sellers of an insurance policy with buyers.

• Represent the policy owner and negotiates the best possible offer for an individual’s unique case, which may be accepted or rejected by the policy owner.

• Owe a fiduciary duty to the policy owner.

• Do not include an attorney, certified public accountant or financial planner retained in the type of practice customarily performed in their professional capacity to represent the owner whose compensation is not paid directly or indirectly by the Provider.

Questions to ask a life settlement broker:

• Licensing – Is the broker fully licensed or do they use borrowed licenses?

• Does the broker provide E&O coverage for you?

• Does the broker provide bid transparency?

• Does the broker have any ownership interest in a provider/buyer?

• Does the broker or its principals 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?

• How many years have they been operating as a broker?

• Does the broker adhere strictly to HIPAA laws?

• What systems does the broker have in place to protect sensitive client data?

• How do they document bid transparency?

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

Life Settlement Providers: 

• Specialize in purchasing life insurance policies in the life settlement market.

• Normally raise capital from institutional investors.

• Working directly with a provider may eliminate intermediaries and expedite the transaction.

Questions to ask a life settlement provider:

• Licensing – Is the provider licensed?

• How many years have they been operating as a provider?

• Who will be the policy’s future owner?

 A client should understand who will become the policy’s owner. 
• an institutional investor
• a non-institutional investor

• What is the likelihood that the life insurance policy may be subsequently resold and to what type of investor?

• How will personal information remain confidential?

• Can an owner keep a portion of the policy’s benefits?

• How will the tracking of the client’s life or health status be conducted after the sale?

• What information will your clients have to provide? To whom? For how long?

• Does the provider offer E&O coverage for you?

• What is the provider compensation process?

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

• What systems does the provider have in place to protect sensitive client data?