The Positive effects of Life Settlement Auctions for Policyholders.

Policyholders interested in selling their life insurance policies have two options with respect to representation and assistance in their life settlement process.

First, a “life settlement provider” is a single buyer in the business of purchasing life insurance policies from policyholders. Companies like Coventry Direct and Lighthouse Financial to name a few are life settlement providers. They are typically large companies who basically tender “take it or leave it offers” to policy holders selling their policies. There is no negotiation or leverage for the seller in this type of transaction.

A second option with respect to life settlements is for a policyholder to engage a “life settlement broker” to assist them in the sale of a policy and with all aspects of the transaction. A life settlement broker utilizes an auction platform to take bids from several proposed purchasers of a policy in order to maximize the value obtained for the policyholder.

The auction platform utilized by life settlement brokers is the only proven strategy for maximizing the purchase price of a policyholders life insurance policy.

A broker represents policyholders and is financially incentive to generate higher purchase prices for policies, in order to maximize both proceeds for the broker’s client and commission for itself.The financial interests of the policyholder and the broker are fundamentally aligned while the financial interests of the life settlement provider are fundamentally opposed.

Life Settlement providers often argue that the advantage of utilizing their services in a life settlement sale is the elimination of intermediary fees like brokerage fees thereby putting more money in the selling policyholder’s pocket. That is only true to the extent the provider will actually offer and pay an amount they claim is representative of the fair market value of the policy. Unfortunately, that is rarely or almost never the case.

More often than not, a broker in a life settlement transaction will create enough competition on a policy sale that the policyholder will realize more money at the end of the day, even counting the broker fees, compared to transacting directly with the provider.

How is it even possible to know the value of a policy without soliciting multiple offers from multiple buyers?

You can’t know. As a result, engaging a life settlement broker is the best way to maximize your value as a policyholder in a life settlement transaction.

The Penning Group is an authorized representative of a Professional Life Settlements Plus, a life settlement brokerage firm with it’s home office in Troy Michigan. Together we provide comprehensive services to assist you in all your life settlement needs.