Too often we come across producers who unknowingly failed to maximize the settlement value of their client’s life insurance policy. It seems like they just didn’t get as good an offer as they should have or, maybe, they didn’t get any offer at all!
(Related: Sell Now or Sell Later: Life Settlement Decisions)
Here are three common reasons why their customers may not have gotten the best price for their policy.
1. Improper purchases
Some insurance producers “go direct” to one or two life claim providers instead of shopping in the vast life claim marketplace. Life insurance providers are increasingly trying to get producers and, in some cases, customers themselves to go directly, as they find this approach enables them to buy policies at lower cost. . Since life claim providers represent the investors, not the policy owner, it is their duty to try to buy a policy for the cheapest possible price.
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Some life insurance providers, who favor direct sellers, may offer them good prices and argue for convenience. However, the seller will never really know if he has reached the highest market value. Life insurance claims brokers, like us, represent the policy owner and it is our job to get the maximum for a client. We scour the entire market and bring providers to compete for policies and increase their offers.
There is an additional problem with the direct pass. In the vast majority of states, a producer seeking a life settlement on behalf of a client is a fiduciary. This means that the producer must do his best to maximize the customer’s offer. A poorly provisioned policy could violate the producer’s fiduciary duty.
2. Use of non-medical underwriting
Make no mistake; there is a place for non-medical life insurance settlement underwriting. It offers speed and simplicity, especially for small fonts, and in some cases benefits healthy customers. However, to maximize a client’s offer, there is generally no substitute for a fully underwritten case. A thorough review of a client’s medical history, especially for older clients, often reveals possible medical issues that even the client was unaware of.
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