Changing Circumstances Require A New Life Settlement Market Process
Our documentation step anchors what we believe to be a superior new life settlement process designed around where the life settlement market will be tomorrow, instead of how the life settlement market was in the beginning and to some extent still is today.
Where The Life Settlement Market Came From
Depending on which life settlement companies you talk to, the early days of the life settlement market might be described as either the good old days or the wild, wild, west. The following is what we remember.
The "Old" Life Settlement Market Approach
Senior consumers were approached (usually by a life settlement agent) with the concept that an existing policy could be sold using a new life settlement for an amount that was on average over 3.5 times as much as they could get by surrendering it for its cash value. For healthy insured's, this proposal was sometimes accompanied by another proposal to use the new life settlement proceeds to buy a new replacement life insurance policy that was often less expensive than the life settlement policy, due to recent life insurance rate deductions within the senior age brackets.
The "Old" Life Settlement Market Process
To proceed, consumers were asked to sign authorizations allowing access to their private medical records which were in turn provided to third party services that would estimate their life expectancy. The results were combined with various policy illustrations and then shotgunned out for "bids" from prospective buyers within the life settlement market. The hope was to create an auction environment that would allow the life settlement market itself to arrive at a valuation for a new life settlement through competitive bidding. Once the bidding was complete, the policy owner was presented with the winning number and an assurance that this amount was the most available after scouring the life settlement market for the new life settlement.
Documentation usually consisted of a list of the other offers, thus "documenting" that the offer presented was, in deed, the highest available from the life settlement market. To the uninformed consumer I'm sure this made sense, especially since the winning bid was often seen as a windfall compared to the meager cash surrender value available from the insurance company. Who knows what the policy was really worth. Critics of the industry have even questioned whether or not the life settlement provider selected had the highest offer or just paid the highest commission?
Previously Unanswered Life Settlement Market Questions
During each new life settlement transaction these were some of the more important questions that often went unanswered:
- How do the buyers determine the life settlement market value before presenting their bids?
- Is the winning bid for the new life settlement policy fair or just higher than others presented?
- What's in it for the person who is recommending a new life settlement to the consumer?
- What are the other alternatives to cash surrendering or utilizing the life settlement market for an unwanted policy?
- How do you determine if the end result of a new life settlement "lines up" with the sellers overall concerns and priorities?
- Are all life settlement brokers paid the same commissions for life settlement transactions?
- Does the broker I'm working with publish its a code of ethics or adhere to those of an recognized life settlement association?
Where The Life Settlement Market Is Going (Or Should Be)
Our process was designed to thoroughly educate consumers about the life settlement market, help them establish priorities, answer their questions, and provide full disclosure regarding compensation and other alternatives to a new life settlement before requesting access to private medical records or other information. If the seller agrees the preceding has been accomplished, we then access anything additional that is required to document the previously unconfirmed elements of the new life settlement transaction, including the extent of the insured's specific health conditions. The resulting information is used to obtain firm pricing for a new life settlement by obtaining firm bids for their policy and/or confirming eligibility for other alternative or complimentary financial solutions.
New Life Settlement Market Goals
We help consumers:
- Determine how much their policy is worth and why
- Understand the life settlement market from an insider's perspective
- Make an informed decision that complements their specific priorities and objectives
