When clients are about to lapse or to surrender a policy, we regularly encourage producers to tell them to give a life settlement a shot. Since we bear the expenses of bringing the policy to the life settlement market, it can’t hurt them or their clients to try, as long as the opportunity is maximized.

A typical case where it “hurts not to try” is an underfunded universal life insurance policy that is about to lapse. The policy owners are shocked by the increase in the required premium to keep their policy in force and too many let it lapse without investigating a life settlement. This omission can happen in one of two ways: the producer did not bring up the possibility of a life settlement as an alternative to lapse or surrender or, without producer oversight, the uninformed client acted precipitously and unilaterally. Unfortunately, this error cannot be corrected by reinstatement as that starts a new contestability period, making the policy ineligible for a settlement.

It can also hurt to be too late. A life settlement is often a lengthy process which requires obtaining medical records which can be extensive on elderly and health- impaired insureds. Adding in the life expectancy underwriting process, unresponsive insurers, and the bidding process to maximize the value of the policy, it can take several months to finalize a life settlement. A policy that is brought to market too late can require additional premium to stay in force until the life settlement process can be completed. So, stay alert to life settlement situations (where a policy is likely to be lapsed or surrendered) or you risk being too late.

It is not important just to try, but to maximize the benefit of a life settlement for your clients, it’s important to try with the right life settlement broker. With new life settlement brokers coming onto the scene almost daily – let the seller beware! An experienced life settlement broker with knowledge of life insurance has the know-how and investor contacts to get your client the most for their policy and can even advise whether or not a life settlement is in your client’s best interest.

So, OK, maybe it can hurt to try? If your life settlement broker is a newbie or not at the top of their game, or not connected with lots of potential buyers, a life settlement can be a painful experience! Let us help you and your clients avoid that discomfort.