October 25, 2019
As more people learn about the value life settlements, there is often confusion about who to reach out to in order to begin a life settlement evaluation. In the life settlement industry, there are two main types of life settlement companies: brokers and providers. A life settlement transaction is regulated at the state level, and most states require that a life settlement transaction goes through a licensed life settlement provider. In some cases (especially cases which involve larger life insurance policies), the policy holder may choose to involve a licensed life settlement broker as well. But what is the difference between the two, and which should you choose to work with?
Pursuing a direct life settlement with a life settlement provider can be beneficial as it minimizes the number of parties involved who receive a percentage of the life settlement offer as compensation for their work during the transaction. A life settlement provider is paid a Provider Fee directly from the buyer of the life insurance policy, so the full offer goes to the policy holder.
In some cases, especially where a larger life insurance policy is involved, a policy holder may decide to put their case through a life settlement broker. The broker then submits the case to a number of life settlement providers to see who can make the best offer, and keep a percentage of the offer as a commission. In cases with a smaller life policy a broker may not be interested as an offer may be too small to provide both value to the policy holder as well as cover their commission.
The Life Insurance Settlement Association’s website (www.lisa.org) has great information about life settlements, as well as lists many of the most prominent licensed brokers and providers in the industry. Many policy holders find this a great place to start when deciding who to reach out to regarding their own potential life settlement evaluation.