A licensed life settlement broker represents a fiduciary duty to the policyowner but not all companies are created equal.
Let’s unpack what this means and how it works.
Life settlements must adhere to both state and federal regulation laws to ensure consumer protections and a safe marketplace. Most states offer two types of licenses;
- Life Settlement Providers: These investors are called “Providers” who are licensed buyers of life insurance policies. Providers DO NOT have a fiduciary duty to the seller. Thus DOES NOT represent the seller in a life settlement transaction so states appointed brokers to help.
- Life Settlement Brokers: Appointed licensed agents who represent the seller in a life settlement transaction. Brokers DO HAVE a mandated fiduciary duty to the seller who must act in the best interest of policyowner by law.
NOTE: The marketplace is also wrought with marketing agencies that pose as life settlement authorities. They basically sell your information or are a front for an investor or provider. Be sure to know you’re working with before you commit or you could be leaving money on the table.
What is a fiduciary duty and why is a brokers representation important?
According to Investopedia, a fiduciary duty is;
“A fiduciary accepts legal responsibility for duties of care, loyalty, good faith, confidentiality, and more when serving the best interests of a beneficiary. Fiduciary duty refers to the relationship between the fiduciary and the principal or beneficiary on whose behalf the fiduciary acts. Strict care must be taken to ensure that no conflict of interest arises to jeopardize those interests.”
Here’s how I frame it, you most likely wouldn’t sell your home without a real estate agent, right? Same is true for a life settlement and having a broker represent you in sale. A good broker is your partner and will guide you through the process to alleviate any uncertainty and avoid common pitfalls. Their success is tied to your success first and foremost and are paid a commission (for the value they produce) for a success sale.
We often get calls from sellers who already started the process with a provider and asked us to represent them. In which we were able to secure a higher settlement value.
Case Study
A client received an offer from a provider for $400,000 on a $1M convertible term. After getting us involved we were able to secure a final offer of $580,000. Our services secured the client nearly $150k in added value more than covering our commission. The client was happy.
If you’re looking for a reputable broker to represent you in a life settlement or viatical settlement, Connect with Bridge today.
Not sure who is representing you? See our list of life settlement companies
