Who Does A Life Settlement Broker Represent? [Updated for 2020]

Selling your life insurance policy as a life settlement can be a difficult decision that comes with many questions. One of the first, and most important questions a policy owner may consider is how do I sell my life insurance policy and where to start?

While some policy owners may opt to go direct to life settlement companies, it is often times a smart decision to consider meeting with a licensed life settlement broker.

Life Settlement Broker Definition

A life settlement broker is a person who, in exchange for a commission fee, works solely for a policy owner to represent the sale of a life insurance policy. A life settlement broker shops a life insurance policy to multiple life settlement providers, much the same as a real estate broker solicits multiple offers for one’s home, with the goal of obtaining the highest offer possible to sell the life insurance policy. A life settlement broker should be licensed with the Department Of Insurance to act in the state they are soliciting and doing business.

While it is the broker’s duty to collect, maximize, and present bids, it is still incumbent on the policy owner, and their advisors, to evaluate the offers against a number of criteria including offer price, stability of funding, reputation of purchaser, privacy provisions, net yield after commissions, and more.

A life settlement broker should help a policy owner navigate the life settlement process with ease and understanding, and should always act in the best interest of the client.

Life Policy Solutions, a licensed life settlement broker since 1999, can help guide you through all options for selling a life insurance policy as a life settlement. We have very successful relationships with all life settlement providers, including the 10 best life settlement companies. We can be reached at 844-440-7355, or www.cashoutlifeinsurance.com.

The Difference Between a Life Settlement Broker and a Life Settlement Provider

In a life settlement transaction there are two sides that come to the table: the seller and the buyer. Typically, each party is represented by a life settlement professional. Providers represent the investors who want to buy policies, and Brokers represent policy owners who want to sell their policies.

Life Settlement Providers represent investors and are duty bound only to them. A provider gets paid by acquiring policies for investors and their job is to acquire them at the lowest possible cost. The fewer competitors they have for a policy, the better chance they will have to acquire that policy at a bargain price. In addition, their compensation may be enhanced by acquiring policies cheaply. 

Brokers, on the other hand, represent policy owners looking to sell their life insurance policy for cash. It is the broker’s job to shop a policy to all available buyers and negotiate directly with the buyers to maximize an offer for the policy. Brokers should always work only for the policy owner and always work in the best interest of the policy owner. Brokers do receive a commission fee for representing the sale of a life insurance policy.

A life settlement broker should help a client navigate the life settlement process with ease and understanding, and should always act in the best interest of the client.

Life Settlement Brokers

• Connect the sellers of an insurance policy with potential buyers.
• Represent the policy owner and negotiates the best possible offer for an individual’s unique case, which may be accepted or rejected by the policy owner.
• Owe a fiduciary duty to the policy owner. Life Insurance Settlement Association

Questions To Ask A Life Settlement Broker

• Is the Broker fully Licensed?
• Does the Broker share all bids in full transparency?
• Does the Broker have ownership interest with the provider/buyer
• Does the Broker buys policies for their own investment portfolio?
• How many years have they operated as a life settlement broker?
• What is their commission rate and is it negotiable?
• Will the Broker explain all offers and provide guidance and information on each buyer presenting an offer?

Life Policy Solutions is a licensed Life Settlement Broker and can provide answers and guidance to all life settlement questions. To learn more about a life settlement option visit www.cashoutlifeinsurance.com, or speak to a life settlement broker at 844-440-7355.

Life Settlement Providers

• Specialize in purchasing life insurance policies in the life settlement market.
• Providers represent investors looking to purchase life insurance policies.
• Normally raise capital from institutional investors.
• Provider can work directly with the policy owner, or with the Broker that is representing the policy owner

Questions to ask Life Settlement Providers

• Is the Provider licensed?
• How many years have they operated as a Provider?
• Who will be the future policy owner?
• Will the new policy owner be an institutional investor or a non-institutional investor?
• Will the policy be resold?
• How will personal information remain confidential?
• Can a policy owner keep, or retain a portion of the death benefit?
• How will the tracking of the insured’s health after the sale be conducted?
• What information will the insured have to provide? To Who and for how long?
• What is the provider compensation process?

To learn more about the 10 Best Life Settlement Companies of 2020 visit our article here

Advantages of a Life Settlement Broker

Life Insurance Producers and policy owners who go direct, without utilizing a life settlement broker, will often miss out on a large portion of the life settlement marketplace. Some providers will not deal directly with producers (or individual policy owners for that matter). Additionally, producers will likely be unaware of some providers.

When a producer goes to only a handful of providers they often times lose out on the highest bids. ThinkAdvisor

A good life settlement broker knows where the money is!

• Life Settlement Brokers can provide guidance and education to policy owners throughout the life settlement process, from inquiry to close of sale.
• Life Settlement Brokers work first and foremost for the policy owner.
• Life Settlement Brokers have an obligation to help policy owners look at and understand all offers, the funding source, the overall gain from the sale, tax concerns, and privacy issues that may arise from the sale.
• Life Settlement Brokers can present a policy to multiple buyers at the same time, maximizing the true potential value of the policy.
• Life Settlement Brokers have the ability through experience and relationships, to navigate the best offers and best life settlement companies to sell to.
• In most states, working as a life settlement broker requires a license, and brokers must take continuing education courses.

How To Find a Life Settlement Broker

Many life settlement brokers are located in, or are licensed to operate in, most every state. You can locate a life settlement broker using the following tools

• Google Search for Life Settlement Broker (try adding in your state to better define your search results)
• Ask your life insurance agent for a referral
• Ask your financial advisor for a referral
• Contact your state Department Of Insurance
• Contact Life Insurance Settlement Association

Life Policy Solutions, a licensed life settlement broker since 1999 can help guide you through all options for selling a life insurance policy as a life settlement. We have very successful relationships with all life settlement providers, including the 10 best life settlement companies. We can be reached at 844-440-7355, or www.cashoutlifeinsurance.com.

Interview potential life settlement brokers and ask questions. Chose a life settlement broker that helps you feel comfortable, safe, well informed, and gives you a sense of trust. Always ask for full transparency in commission fees.

Understanding Broker Commissions

Life Settlement brokers have different commission fee structures. While there is no industry norm, there are three commonly used structures, described below.

Always ask a life settlement broker their commission up front and know that a commission may be negotiable. Not all brokers charge the same commission rate.

Percentage of Offer: Many brokers calculate commission fee based on a percentage (up to 30 percent) of the settlement offer.

Take This Example:
Policy Face Amount – $1,000,000
Gross Settlement Offer – $150,000
Commission To Broker (30%) – $45,000
Net Settlement to policy owner – $105,000
(NOTE: Commissions may be negotiable, and on average a life settlement commission is around 20%.)

Percentage of Face Amount: Some brokers calculate the commission fee based on a percentage (up to six percent) of the total face amount of your Life Insurance policy.

Take This Example:
Policy Face Amount – $1,000,000
Gross Settlement Offer – $150,000
Commission To Broker (6% of face amount) – $60,000
Net Settlement to policy owner – $90,000
(NOTE: Commissions may be negotiable, and if working on a percentage of face amount, the average life settlement commission is around 3% of face amount.)

Flat Fee Commission: Some brokers calculate the commission as a flat fee rate that is agreed to between the broker and the policy owner.

Take This Example:
Policy Face Amount – $1,000,000
Gross Settlement Offer – $150,000
Commission To Broker (Flat Fee) – $10,000
Net Settlement to policy owner – $140,000

Policy owners always have the right to negotiate a life settlement broker commission and should always receive full transparency from a broker throughout the life settlement process.

Next Steps To Sell A Life Insurance Policy

Selling a life insurance policy is a process that requires understanding and guidance. While some policy owners feel confident enough to sell a policy on their own by going direct to life settlement providers, it is often advised to work together with a life settlement broker to ensure the policy is presented to all potential buyers, and all offers are maximized.

Whether a policy owner opts to sell their life insurance policy on their own, or whether the policy owner works with a life settlement broker, the process all begins the same.

Policy owners will be asked to provide the following:
• Copy of the Life Insurance Policy
• Complete a life settlement application
• Provide medical history for the last 3-5 years, including doctor information
• Provide premium and ownership history

The life settlement process can take anywhere from 8 weeks to as much as 3 months

It is always advised to policy owners to ask lots of questions, make sure you feel comfortable with and understand all information, and remember that you, the policy owner, can accept or decline any offers and you are not obligated to sell your life insurance policy.

Life Policy Solutions, a licensed life settlement broker since 1999, can help guide you through all options for selling a life insurance policy as a life settlement. We have very successful relationships with all life settlement providers, including the 10 best life settlement companies. We can be reached at 844-440-7355, or www.cashoutlifeinsurance.com.

To learn more about life settlements and the important questions please visit our Life Settlement Guide and Blog

What Is A Life Settlement? Important Questions To Help You Sell Your Life Insurance Policy

7 Reasons Why To Sell A Life Insurance Policy For Cash

Frequently Asked Questions about Life Settlements

Qualify For A Life Settlement in 4 Easy Steps

For more help and information about Life Settlements and How To Sell A Life Insurance Policy please visit the following

• Life Insurance Settlement Association https://www.lisa.org/
• Contact A Licensed and Qualified Life Settlement Broker to provide Guidance, Support, and Sales Assistance https://cashoutlifeinsurance.com/
• Visit or call your state’s Department Of Insurance