Author: Jeff Foster
As the population of seniors continues to increase over the next several years, life settlements will become a more and more common financial service. It is a major financial transaction, however, and should not be taken lightly. For those considering it, a key step is finding a trustworthy life settlement broker.
A life settlement is a relatively new transaction that many people know little about. Basically, it entails selling your life insurance policy to a life settlement provider for an amount greater than the cash value of the policy, but less than the death benefit value. Seniors with policies they don’t need, premiums they can no longer afford, or an immediate financial need such as mounting medical bills, might find such life settlements beneficial.
The life settlement broker’s job in these transactions is to collect bids from competing providers, typically funded by hedge funds and large financial institutions. Experienced brokers know which providers would most likely be interested in various types of policies. They will also be able to present the policy to potential buyers in the most attractive light. Without a broker, an individual policy owner or even a financial advisor would be unlikely to find the best settlement possible.
Typically, brokers earn a commission from the buyer based on the settlement transaction. How these commissions are structured can vary widely. In some cases the commission is based on the face value of the policy benefit. In such a case the commission is usually a smaller percentage of the base amount, though the base amount is higher, and there is little incentive to shop around for the best deal since the commission would be same no matter what. Others base the commission on the settlement amount, which creates more of an incentive to find you the best settlement. This arrangement does not take into account any cash value built in the policy, so it may best suited for people who have little or no equity in their policy. Still others base the fee on the amount of the settlement over the surrender value of the policy. This may result in a higher commission percentage, but the percentage would be based on a smaller base.
Many states have developed or are in the process of developing licensing regulations for brokers. Meanwhile, the National Association of Insurance Commissioners maintains standards of practice for all professionals involved in such transactions. These standards are not legally binding, but reputable brokers should adhere to them explicitly.
Many seniors are liable to find life settlements to be potentially useful and beneficial options. But like all major financial transactions, they present some risks. To reduce those risks, and to increase the likelihood of a beneficial settlement, it is important to utilize the services of a qualified, reputable life settlement broker.
Looking to find the best deal on life settlements, then visit lifesettlementsource.blogspot.com to find the best advice on life settlement brokers.
—
More on the Topic of Insurance Online
How Much Does Life Insurance Cost
Cheap Auto Insurance California
Life Insurance Quotes For Seniors
Thanks
