The reality of representation by a broker in life settlement cases is simple. Using a professional life settlement broker will result in obtaining the highest possible price for the sale of a life insurance policy. As a result, this fact puts the most money in a policyholder’s pocket. Period.
A life settlement broker and the policy holder have the same objective: to sell the policy for the highest price. Life settlement brokers represent the policyholder and therefore has a duty to act in the best interest of the policyholder.
However, some policyholders or their professional financial advisors fall prey to the myth promoted by increasingly aggressive national marketing campaigns by “life settlement providers” (direct providers). Most often, direct providers represent institutional funds who are buying the policy, or they are the actual buyer.
Like in any transaction, when you are on opposite sides, there is a disincentive by the buyer to offer the maximum purchase price for a policy. As a result, there is a big difference in the goal of a life settlement broker who wants to maximize the price for the policyholder and a direct provider who wants to pay the lowest possible price and maximize their own benefit.
Direct providers often argue that any increase in the sales price obtained by a broker for a policyholder is consumed by intermediary fees like the broker’s commission. That argument is false. More often than not a life settlement broker will create enough competition on a policy sale that the policyholder will realize more money on the bottom line, even after deduction of the commission from the sale price.
The reality in life settlement transactions is that brokers represent the seller and the brokers duty then lies with the seller and direct providers are the buyers and so their interests are always opposite the seller/policyholder.
Professional Life Settlements Plus is a life settlement brokerage firm with established and reliable relationships with institutional investment funds that are utilized to maximize the price paid to our clients.
Are you a policyholder or financial advisor with a client interested in a life settlement? Call us today!
