How to Help Your Client Choose a Life Settlement Provider
Friday, July 9, 2021
Section: Financial Advisors

Many life insurance policy owners may wonder where to start when pursuing a life settlement provider. Selling a life insurance policy is an important decision for policyholders to make and one that should not be taken lightly. They need to know they can trust their provider to help them sell their policy, which is why the decision must be evaluated on a case-by-case basis. Having a complete understanding of your client and their goals is imperative in guiding them in their determination of how to choose a life settlement provider. 

For many clients, a life settlement is a great way for them to liquidate their life insurance policy, which may be critical in helping them get a lump sum of money, deal with a shortfall in their retirement savings, or enable them to continue living their life well into their later years. As an advisor to your client, you must determine your client's needs and their reasoning behind choosing to liquidate their life insurance and opt for a life settlement before helping them choose a life settlement provider.


Your Client Needs To Understand The Life Settlement Process

Clients, first and foremost, need to have a solid understanding of the entire life settlement process. They also need to comprehend the legalities of life settlements, particularly depending on the state they live in because some states have different regulations. You must also ensure your client chooses to work with a life insurance broker or provider who is licensed to work in the state the policyholder lives in.
It’s imperative to review your client's current life insurance policy before having conversations about life settlements. Review their beneficiaries, premiums, and death benefits, and any other information necessary to ensure that you have a complete and thorough understanding of their situation.

Differences Between Working with a Broker or a Direct to Consumer Provider

Differences exist in terms of working with a broker or choosing a direct to consumer provider. Working with a broker can reduce the amount of time your client will have to spend researching and comparing consumer providers. The broker will conduct the policy auction for you including bidding, researching the competition, and contract with the provider. You want to find a broker for your client that can help translate the intimate details of their life settlement as clearly as possible. 
On the other hand, working with a direct to consumer provider can potentially offer some transaction efficiency for your client. However, your client may then have to spend more time conducting some of the research and comparing providers on their own. Direct to consumer providers have worked tirelessly to make the process as simple as possible on their end. Generally, they will help with the review of documents and medical records, determine a reasonable life expectancy range, assess risk, and so on. 
Many clients will rely on the wisdom of an advisor to help them choose a life settlement provider. Make sure that they feel comfortable and informed about the entire process. As an advisor, you need to let it be known that your goal is to protect your client’s best interests and negotiate for the best offer you can receive on their behalf.