Whether seeking a viatical settlement or a life settlement, this is often the first question people ask me. “How much money will I get if I sell my life insurance policy?” It’s also one of the most difficult to answer because there is no easy answer. Telling a prospect a percentage or dollar amount that I know will entice them to complete my application does not serve anyone. To do so would be misleading. I don’t want to mislead anyone, nor do I want to raise someone’s expectations.
That said, after an initial phone conversation, I can give you a pretty good idea of whether this is an option that makes sense or not. And, I do to taking into account your particular situation, health condition, age and policy type. Once I understand this, I can generally advise if it’s worth applying and taking it further, if the case will not qualify in the current marketplace or, if there may be a more beneficial alternative!
Each case is different and many factors must be taken into account before we will know how much someone will get should their policy be successfully sold. Until all the facts are known and verified, a bona fide offer cannot be made.
Once all the information is gathered and evaluated (typically by the settlement broker), it should then be presented to those companies which would be most interested in it. A competent and independent life settlement broker will create a competitive bidding war between multiple qualified providers, thus ensuring the seller the highest amount of money (the settlement) for their policy.
It’s important to get multiple offers because each buyer has their own pricing criteria
There are many variables to consider when Provider companies assess the value of a policy. The two most important factors considered by Providers (the licensed companies that purchase the policies), are 1) the life expectancy of the insured and 2) the anticipated cost for maintaining the policy for that time period, plus a little extra in the event the insured outlives the expectations. Additionally there are numerous administrative costs that the Provider must incur for each case they review – whether or not they offer on it.
Making it more complicated for the policy sellers to navigate this marketplace on their own, is that all Providers have varying costs and different buying parameters which results in very different bottom lines to the seller.
A knowledgeable, life settlement specialty broker will know the ins and outs of this marketplace, have relationships with numerous providers, knowing which ones are buying what type of policy/life expectancy blend at any given time, etc. A life settlement broker has their pulse on this sometimes volatile market and will most effectively guide the policy seller through it, netting them the most beneficial outcome.
Remember: Selling a life insurance is an important decision and one that should not be taken lightly. It is important to do your homework and choose your advocate wisely!