Commercials and ads for life settlements directly aimed at policy owners, at your clients, are becoming increasingly more common. Unfortunately, without your valued advice and that of an experienced life settlement broker, your clients could very well be making a poor decision, as well as failing to get the maximum value for their policy.

Selling a policy is a critical and an irrevocable decision. Yes, a life settlement is a creative way to find hidden value in a life insurance policy, but life settlement buyers aim for policies on insureds with impaired health. As a result, sellers generally cannot qualify for new insurance and, therefore, the coverage that is sold can never be replaced.

Clients need your help in taking this important step. Most clients lack the expertise to make this decision and when they go direct, they are frequently dealing with a company that represents, first and foremost, the buyers of the policies and not your clients. They have no interest in counseling your clients on the advisability of keeping a policy – in fact, just the opposite!

There are primarily two significant ways a client can go wrong when dealing direct. First, is the threshold keep or sell decision, determining if the policy is still needed, wanted or affordable for them. Second, is whether they are getting the highest possible offer for their policy.

As to the first, the most important thing to know about a life settlement, and be sure that your clients know this too, is that it is an alternative to lapsing or surrendering a policy, not to keeping a policy. Buyers acquire policies to achieve significant rates of return – returns that, if the policy were retained, could benefit the client’s beneficiaries rather than the buyers.

Second, when going direct, they need to understand that it is the buyer’s duty to acquire policies for their investors at the lowest possible price. This is unlike working with you and an experienced life settlement broker, whose duty is to help you sell the policy at the highest possible price. This is done by contacting multiple potential buyers, pitting one against the other, so that you achieve the maximum selling price for the policy.

Valuing and selling a policy are difficult because there is no sticker price. A trusted, experienced life settlement broker has the knowledge to assess whether an offer is fair and reasonable. Additionally, working with a life settlement broker who is also a life insurance professional can help your clients evaluate whether a life settlement is right for them. Knowledge of life insurance is a secret weapon to helping your client through the process. 

So, what can you do to keep your clients from bypassing you? First, you want to be sure that they are aware of the possibility of selling their policy before it is lapsed, surrendered, or sold through a third party and that you can help them through the process. Second, you want them to know that it is to their benefit to come to you, their trusted advisor, and not just respond to a stranger’s ad or a TV commercial. You can help them make the right choice: should they keep or sell their policy? If selling is the right thing to do, you can help them sell it for its maximum market value.

To make it easy for you to let your clients know that you can help them with a life settlement, we have a sample letter that you might wish to send out to let them know of the possibility of selling policies that they no longer need, want, or can afford. To get your copy, you can email or call us.

Contact us:

Robin S. Weinberger, CLU, ChFC, CLTC 

(617) 451-3343

 

Peter N. Katz, JD, CLU, ChFC, RICP^®

(860) 937-2936

Ria J. Johnson, CFP^®

(619) 920-4000

Rob Haynie

(954) 599-4433

© 2023 Peter N. Katz. All rights reserved.

Robin and Peter | 220 Boylston Street, #1204, Boston, MA 02116