Life Settlement Auction and Life Settlement Exchange Platforms
A new innovation in the life settlement market is the advent of the life settlement auction otherwise known as a life settlement exchange. Although new to the US, the concept of auctioning life insurance policies has reportedly existed in Great Britain for over 100 years.
How Life Settlement Auction and Life Settlement Exchange Platforms Work
Life settlement auction and life settlement exchange platforms enable policy owners working with their producer/advisor to sell their policy in a secure online environment. Policies are typically "listed" with a reserve minimum value the seller is willing to accept. The policy trades when the auction meets or exceeds the reserve price.
Life Settlement Auction and Life Settlement Exchange Platforms Fees
These online platforms were designed to make bidding more competitive and the pricing of life settlements more transparent. However, transaction fees vary from one life settlement auction / life settlement exchange to another as do the types of buyers that are allowed to purchase policies. For this reason, policy owners should compare all aspects of a life settlement auction or life settlement exchange to a traditional life settlement before assuming one or the other represents a better opportunity.
Life Settlement Auction and Life Settlement Exchanges are Exclusive Agreements
Unlike traditional life settlement agreements that permit multiple brokers to work on selling a policy at the same time, life settlement auction and life settlement exchange agreements are typically exclusive. Proponents consider this exclusivity an advantage over the confusion and delays that can occur when agents engage four or five brokers to work on the same case without really knowing who's truly representing the policy owner's best interest. There is validity to this argument for using a life settlement auction, if all other factors are at least equal.
Future of Life Settlement Auction and Life Settlement Exchanges
Because the concept of using a life settlement auction or life settlement exchange is so new in the US, the current volume of policies changing hands this way is still quite low. Some experts, however, believe the volume of policies sold using a life settlement auction or life settlement exchange will increase and become more steady and predictable as time goes on. Most agree that the life settlement auction / life settlement exchange approach works best when the market is vibrant and five or more bidders are interested in buying a specific policy.