November 15, 2018
Life settlements are highly regulated transactions, governed by each individual state’s insurance laws. Currently, 43 states regulate life settlement transactions. In these regulations, the parties to a transaction are outlined, as well as such parties’ role and responsibilities in a transaction. Two of the key parties are the life settlement provider (also sometimes referred to as a viatical settlement provider) and the life settlement broker (also sometimes referred to as a viatical settlement broker). The life settlement broker and life settlement provider each fulfill a separate role in a life settlement transaction. The life settlement broker represents the policy owner/seller of a life insurance policy, with the objective of maximizing the payout that the policy owner/seller will receive in a life settlement. Typically, the life settlement broker is paid a commission from the sales proceeds. The life settlement provider is the company that is licensed to facilitate the sale of the policy, working with the life settlement investor to complete the policy purchase in compliance with all applicable rules and regulations. The licensed life settlement provider is the only party in the transaction that is authorized to work directly with the seller and also represent the buyer to complete a policy sale. Life settlement providers are paid a closing fee by the buyer of the policy, and the seller has no responsibility for paying any fees or commissions to the life settlement provider.
For more information, see our page on the role of the life settlement provider in a life settlement.