Do I Need a Settlement Broker?
Life insurance may seem fairly straightforward: get a plan when you’re healthy, keep your premiums up to date, and when you die the face value is paid to your beneficiary. But there are other scenarios, and one of them is to sell your policy.
Life insurance settlement, or life settlement, constitutes the sale of a policy for its present market value. Seniors can access the equity accrued in their policies to pay debts or for unexpected bills, emergencies, or just to enjoy living!
Arising as an option in the last decade, this option evolved from the viatical settlements option developed in the 1980s. Prior to these alternatives, the insured had just two options: borrow against the cash value of a plan, or turn to the insurance company for the policy’s surrender value.
Now seniors can access true current market value from their agreements! But there are some restrictions to consider:
- You must be 65 or older.
- Be free from terminal illness.
- Have an expectancy of 12 years or less.
The majority of retired seniors qualify, and that likely means you do too!
I Qualify - Now What?
On the surface, this concept is simple to understand. But where do you find someone to buy your policy? There are many steps and considerations in the process. That’s where brokers come in.
It is possible to find a buyer for yourself, but the actual process can become a tangle of government rules and regulations, not unlike trying to sell a home yourself, including navigating all of the documentation. It isn’t something most amateurs want to tackle, and for a good reason.
What Is a Settlement Broker?
Often referred to as a viatical broker, this individual is a licensed insurance expert who will walk you through the process of settling the current market value of your plan - and will manage the minutiae that accompanies it, including selling the actual policy.
Though most states do not regulate the activities of agents in this scenario, there are requirements which they must fulfill. They must be:
- Registered with the U.S. Department of Justice.
- Registered in one American State.
- Registered with a minimum of one provider.
- Insured against errors and omissions.
For your own protection - and to maximize the benefit - the broker should be willing to let you compare the rates charged and services offered by various professionals. The agent you are considering should also have a reputation for trustworthiness and integrity.
How Do I Choose One?
After you’ve qualified a professional, determined the maximum benefit they can provide and their personal integrity, it boils down to personalities. Do I get along with the professional? Does he or she care about people in general, and me in particular? Are they in the business just to make a fast buck, or do they care about how this strategy helps people in their golden years? Do I like them? It’s not too much to ask.
In the end, using a broker is the preferred way to maximize a life settlement. And it can be a wonderful way to get the most out of your retirement years.