Life Settlement Brokers

As life settlements become mainstream, selling a life insurance policy with a life settlement broker is less known to the general public. Understanding the role a life settlement broker plays in the transaction is instrumental to achieving the best results when selling a life insurance policy but should you hire one?

What’s a life settlement broker?

A life settlement broker is a licensed agent who legally represents the policy seller in a life settlement transaction. Rather than a seller going directly to a single buyer (called a life settlement provider) and receiving only one offer, a broker typically invites multiple buyers to bid on a life insurance policy thus driving up competition and offers. Brokers are appointed as fiduciaries by the state to look after a seller’s best interest and ensure policies are sold for fair market value or the highest possible value. A life settlement broker facilitates every aspect of the sale with their clients and does most of the heavy lifting including; valuation, underwriting, application, auction, title, closings, and post-sale activities. Brokers are paid a commission only after a seller accepts an offer. Brokers are financially incentivized to increase the policy’s value. Although life settlement brokers represent the seller they also work with providers to achieve favorable outcomes for their clients. Working with a reputable and licensed life settlement broker is the safest way to achieve the highest payout when selling a life insurance policy. Just as most people shouldn’t sell their home without a real estate agent. The same is true for hiring a life settlement broker when selling a life insurance policy.

Auction process

Life settlement brokers facilitate the sale of a life insurance policy through a private auction. A life settlement auction is an event that invites multiple buyers (providers) to bid on a life insurance policy within a timeframe to achieve the highest offer for their client. This competitive process is what sets brokers apart from providers who make a single offer from available funds.

Brokers vs Providers

Deciding who to hire when selling a life insurance policy can be confusing because the market is saturated with direct buyers and marketing organizations cloaked as authorities. Here’s a basic comparison to consider before hiring a broker or a provider.

Remember to always ask, “Are you a broker, provider, or marketing organization?”

Comparison Chart

Fiduciary

Offers

Incentive

Protection

Brokers

Yes

Mutiple

Highest Sale

Safe

Providers

Single

Lowest Purchase

Moderate Risk

Commissions

Although life and viatical settlements are mostly regulated, each state has its own set of guidelines and adoption of the NCOIL and NAIC model acts – a set of ethical guidelines. Life settlement transactions are equivalent to selling real estate and with large transactions come large commissions for both direct buyers and brokers alike.

The SEC Life Settlements Task Force report highlights commissions upward of 30% or more of the purchase price.

Determining an appropriate fee structure requires careful consideration of factors like:

Prevailing market practices and customary commission rates
Complexity and size of the transaction
Level of service and expertise provided
Negotiation and agreement with the policy owner
Applicable state regulations and disclosure requirements

In short, every brokerage may have their own set of criteria for charging a commission. Some commissions are based on the face value of the policy whereas others are based on the net proceeds. The key takeaway is that policy sellers should hire a broker who charges a reasonable fee for the value they offer. Some states allow for limited disclosure of commissions. Always get a specific number (in writing) before contracting with a life settlement broker.

Why hire a life settlement broker?

Everyone’s situation is different and selling a policy might not even be the best option. A good life settlement broker will help you determine if selling is the right choice or not. They will also help set reasonable expectations and charge a fair commission based on the value they bring to the table. If you’re considering selling your policy, a life settlement broker is legally committed to your best interest. It’s highly advisable to seek out a reputable life settlement broker oppose to selling a policy direct or off market.

Discover the Bridge Difference

There are many good life settlement companies out there, but Bridge is one of the best to consider if you value transparency, fairness, and seller protection. As a fiduciary, we put your interests first, guiding you through every step with care and integrity.

Our performance-based commission structure ensures we’re financially aligned with your success.

Curious about what drives us and why I started Bridge? Read my story and see how we’re redefining what’s possible for policyowners like you.

Ready to take the next step? Get a Qualified Value Opinion and discover the opportunities waiting for your policy.

“There are far better things ahead than
any we leave behind”

– C.S. Lewis

FAQ’s

What does a life settlement broker do?

A life settlement broker does multiple activities in the process of helping a client sell their life insurance policy including but not limited to; qualification, valuation, application, record gathering, title work, closing proceedings, negotiation, auction management, compliance, and post-sale activities to name a few.

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*This is not financial advice. Consult your financial and tax professionals.

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