Success Stories Help Producers Understand the Value-Added Benefit of Using a Life Settlement Broker

March 31, 2015 

As the word on the street continues to spread that the life settlement industry is picking up steam, more and more producers and financial professionals are taking a second look at life settlements for clients with policies they no longer want or need.

Insurance producers who are already familiar with the value-added benefit of an experienced life settlement broker require no convincing about the important role that the broker plays in shopping the case in the secondary market to help them generate the highest possible offer for their clients’ policies.

But many agents who are new to life settlements may not fully understand how the marketplace works and why they should use a broker.

While some agents may decide to handle their client’s life settlement transaction by working directly with a provider/funder, what they may not realize is that the offer they receive from that one provider/funder may not necessarily be the highest possible best offer available. As a result, it leaves the policy owner to wonder whether they actually received the fair market value for their life insurance policy.

To help producers better understand how using a life settlement broker creates greater value for their clients’ policies, we decided to showcase two recent cases brokered by Asset Life Settlements.

Bidding activity for $1 mil. policy begins at $120,000 and ends with a gross offer of $225,000

This case which was brokered by Asset Life Settlements involved a $1 million trust-owned life insurance policy. The insured, an 81-year old male, no longer needed the policy and wanted to eliminate the expensive premium payments. The policy was running low on cash and the insured was concerned that the premiums were draining cash from assets in the trust. In short, the policy was in danger of lapsing at some point in the near future and the owner felt there had to be a better solution.

The insured contacted his life insurance agent seeking advice on all the options available. After conducting a policy review and weighing the options, his agent recommended a life settlement. The client agreed and after checking around, the agent was referred to Asset Life Settlements because of our reputation as one of the most experienced brokerage teams in the industry. We were pleased to represent the agent and his client in this transaction.

We began the medical underwriting process by first ordering the attending physicians statements (APS) and life expectancy (LE) reports. Once the supporting documentation and medical underwriting was complete, we shipped the case to twelve licensed providers/funders. Along with a number of declines from funders who were not interested in bidding on the policy, we were successful in receiving bids from six providers/funders. The lowest bid came in at $120,000, and the highest, final bid (gross offer) came in at $225,000 – approximately 23% of the death benefit.

Needless to say, the client was very happy with the choice he had made to pursue a life settlement. And, he was grateful for his agent’s expertise in recommending the life settlement option.

Asset Life Settlements brokered $10,000 beyond one funder’s direct offer to an agent

This case involved a 75-year-old male from Florida who owned a $700,000 term policy he could no longer afford. The insured needed to maintain some life insurance coverage and consulted his agent about methods to reduce the face value. The agent recommended he sell half of the death benefit and use the proceeds from the life settlement to pay the premiums on the remaining coverage of $350,000.

When the agent approached us, he explained that he was working directly with a provider, but subsequently he felt it was important to go through a life settlement broker who could shop it for a higher amount.

After reviewing the details of the case, we informed the agent that the case presented a number of challenges.
• First, the $350,000 death benefit is considered on the lower end of the scale in terms of what most providers/funders are interested in purchasing.
• The second challenge was the fact that the insured lived in Florida where there are a smaller number of licensed providers.

Irrespective of the challenges, we rolled up our sleeves and shopped the case to multiple funders with the goal of beating any direct offer that the agent would receive. We were successful in receiving a gross offer that was $10,000 more than the direct offer the agent ended up getting.

The agent was thrilled with the outcome, and the client was extremely pleased that he was able to use the proceeds from the life settlement to zero out the premiums on his remaining $350,000 life insurance policy. This case was certainly a win-win for everyone, especially for the agent who is now convinced more than ever of the value-added benefit of using a life settlement broker.