The Benefit of a Life Settlement Auction

Jan 18

Simply put, brokers deliver more dollars to their clients.

Brokers work for the policy owner and that often results in maximizing the life settlement value of a policy as opposed to dealing with a captive direct buyer.

Auctions Create Competition-Provide More Value

The vehicle used by the broker to maximize the value in a life settlement to the policy owner is a life settlement auction. The auction platform set up by the broker is better because the auction creates competition among potential buyers which creates a true test of the fair market value of the policy being sold.

Brokers Owe Duty To The Client-Policy Holder

A broker representing a policy owner acts as a zealous advocate who fulfills a fiduciary duty to act in the policy holder’s best interest. A sales person or agent acting on behalf of one of the large national settlement providers is not on your side and has no incentive to pay the policy holder anymore than is necessary to get the policy owner to sell.

A broker using an auction acts with a duty to the policyholder and maximizes the settlement price using an auction. The direct buyers start at the bottom with settlement offers, use their own agents acting on the direct buyer’s behalf and pay the very least they can in order to close a settlement sale.

The auction process and platform generates multiple offers where buyers are invited by the broker to submit bids for what they would be willing to pay for the policy. The highest bidder for the most money wins the auction. That’s competition driving value. That’s the best way to know you sold a policy for the highest amount possible.

Oh, and the old argument by direct buyers that dealing solely with them and at their mercy for the lowest sale value is better because you avoid broker’s fees, that’s total bunk.

Brokers Using Auctions Outperform Direct Buyers

An experienced life settlement broker will create enough competition on a policy sale that the owner will realize more money at the end of the day,even when taking into account all broker fees, compared to transacting directly with only one provider.

The conclusion is that a policy owner can earn more money and be properly and professionally represented by an experienced brokerby not accepting the low ball offer from one settlement providers. How do you think the large providers afford all that expensive national advertising?

They pay for it through profiting from bargain purchase prices from policy owners.

In a recent blog I detailed the benefits of using a life settlement broker as opposed to dealing with a direct buyer like the nationally advertised firms.

Read that Blog