What Producers Should Know About Life Settlements and Fair Market Value

15 May, 2015
What Producers Should Know About Life Settlements and Fair Market Value
By: Jeff Hallman and Scott Thomas
It’s a fact. The life settlement industry is in a growth mode. As a result, insurance professionals across the country are seeing a flurry of marketing campaigns offering to facilitate the purchase of their clients’ life insurance policies.
This is a good thing. Increased messaging about the benefits of a life settlement can only help to establish greater consumer awareness for a product that, for some, may be the most sensible option for unwanted policies. Unfortunately, many Americans who own policies that are on the verge of lapse or surrender are leaving billions of dollars on the table, as noted in Warren Hersch’s recent article entitled Forfeited life insurance benefits pegged at $112 billion
Agents familiar with the life settlement marketplace recognize that the life settlement broker has traditionally played a key role over the years in creating the secondary market arbitrage (bidding war) that ultimately establishes each policy’s “fair market value.”
But, to those agents who believe they are being targeted with marketing messages directly from providers/funders, it may appear as though the provider/funder is leapfrogging the familiar agent-broker-provider/funder model.
Many agents – especially those who are new to handling life settlement transactions for their clients – may not fully understand the role of each player and the dynamics of the marketplace. Some agents who are being approached by both brokers and providers/funders may become overwhelmed or confused as it relates to the correct approach. Their primary goal is to help their clients make the right decision while feeling confident that the offer they have received represents the policy’s fair market value. However, that is difficult to accomplish by working directly with only one or two providers/fundersBy: Jeff Hallman and Scott ThomasIt’s a fact.

The life settlement industry is in a growth mode. As a result, insurance professionals across the country are seeing a flurry of marketing campaigns offering to facilitate the purchase of their clients’ life insurance policies.This is a good thing. Increased messaging about the benefits of a life settlement can only help to establish greater consumer awareness for a product that, for some, may be the most sensible option for unwanted policies. Unfortunately, many Americans who own policies that are on the verge of lapse or surrender are leaving billions of dollars on the table, as noted in Warren Hersch’s recent article entitled Forfeited life insurance benefits pegged at $112 billion

Agents familiar with the life settlement marketplace recognize that the life settlement broker has traditionally played a key role over the years in creating the secondary market arbitrage (bidding war) that ultimately establishes each policy’s “fair market value.” But, to those agents who believe they are being targeted with marketing messages directly from providers/funders, it may appear as though the provider/funder is leapfrogging the familiar agent-broker-provider/funder model.Many agents – especially those who are new to handling life settlement transactions for their clients – may not fully understand the role of each player and the dynamics of the marketplace. Some agents who are being approached by both brokers and providers/funders may become overwhelmed or confused as it relates to the correct approach. Their primary goal is to help their clients make the right decision while feeling confident that the offer they have received represents the policy’s fair market value. However, that is difficult to accomplish by …

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