How to Get a Life Settlement Quote
Life insurance represents an important financial asset. When thinking about their resources, many seniors overlook their term, whole, or permanent life insurance policy as a potential source of needed funds. Financial advisors may automatically exclude life insurance policies as a financial asset, as well.
The life insurance industry is well-regulated by federal and state laws. In fact, over 90% of the population of America, including Puerto Rico, is protected by state and federal laws that cover everything from privacy to how life settlements are taxed.
People own a life insurance policy worth more than $100,000, are at least 65 years old, and no longer need or want the death benefit associated with the policy may be eligible to sell their policy to a third-party investor.
High premiums, the need to pad retirement savings, rising medical care costs, or even the urge to travel or upgrade their standard of living during retirement are all common reasons that seniors decide to part with their life insurance policies.
Who buys life insurance policies?
It’s important to understand that no “one” person or investor will own your life insurance policy, collect the payout upon your death, or lose money if you live longer than predicted. Life insurance policies are grouped together and multiple investors buy fractional interests in a large number of policies. In some cases, investors or financers provide money to a life settlement provider so they can purchase life insurance policies from individuals.
Who helps people who want to sell their policy get a life settlement quote?
If you meet the general criteria to participate in a life settlement and would like to learn more about selling your policy for cash, you are probably curious about how to get a life settlement quote.
Getting a quote for your life insurance policy means choosing between working with a life settlement broker or a life settlement provider.
A life settlement provider is a company licensed to buy life insurance policies. They do so on the behalf of large institutional investors. Different providers specialize at purchasing different types of insurance – for instance, some providers specialize in buying senior life insurance (a life settlement), versus some specialize in purchasing life insurance from people with serious medical conditions (viatical settlements). A life settlement investor uses life settlement providers for origination. You should never entertain the idea of working with a life settlement investor who shows interest in your policy, directly.
A life settlement provider has a great deal of experience evaluating a life insurance policy. They make offers based on how much it costs to keep the policy in force, the insured person’s life expectancy, and the general investment environment at the time.
Your financial advisor may be able to speak with a life settlements provider directly and eliminate brokerage fees. Be aware that in this scenario, the life settlement provider will give a quote that consists of what they and/or their investors are willing to pay for the life insurance policy. You will not receive competing bids for the policy.
A life settlement broker works on your behalf to get the largest amount of money for your life insurance policy. They work on your behalf and communicate with several life settlement buyers and institutional investors with the goal of getting you the most money possible for your life insurance policy.
You can work with your financial advisor to find a life settlement broker that you are both comfortable with. Unless you have a financial advisor with a lot of experience selling life insurance policies and contacts in the world of life settlement investors, the brokerage fees often pay for themselves when you get a larger amount of money for your life insurance policy.
If you decide to get quotes for your life insurance policy through a life settlement broker, you can rest assured that the entire process is non-binding and free to you. The life settlement broker will collect all the necessary information from you and then generate a guaranteed quote that represents the highest amount of money an investor is willing to give for the policy.
As the policy owner, you have a certain amount of time to accept the offer and proceed with the process of selling your life insurance for the quoted amount, or reject the offer and keep your policy. If you decide to sell your policy to the investor for the amount presented by your life settlement broker, the broker will make a commission on the transaction. You should not be required to pay any money upfront or out-of-pocket. The commission comes out of the total amount of the life settlement.
Here are some things to watch out for if you decide to enter the process of getting a life settlement quote through a broker:
State licensing requirements
While each state has their own laws regarding the life settlement process, you’ll want to be assured that the life settlement broker you choose is properly licensed in your state.
Disclosure of fees and commissions
You should receive information about what percentage of the life settlement a broker charges. There is a 30% cap on commission rates. You may pay as little as 15% commission, depending on the brokerage firm you choose.
A life settlement broker who is working in your best interests will look for more than one offer. Their goal should be to get the most money possible for your life insurance policy. If you feel pressure to take the first offer to close the sale quickly, you may want to consider using a different firm.
A life insurance broker should be able to discuss the state and local laws affecting your life settlement. In some states, a life insurance agent is required to disclose life settlement as an alternative to surrendering or letting an unwanted life insurance policy lapse.
Many seniors find that their financial priorities change drastically as they age. A life insurance policy that once protected your dependents from financial devastation upon your death may no longer be necessary. Rising healthcare costs, the need for more robust long-term care insurance, or new life goals are all viable reasons behind seeking a life settlement quote.
To learn more about how to get a quote for your life insurance policy, check out this “Get Started” guide.
Ovid is a life settlement exchange. We instantly match you with institutional buyers who are interested in your policy, based on you and your policy profile. Getting an offer for your policy from Ovid buyer partners is completely free. If you do want so sell your policy, Ovid has proven to help obtain average payouts above the industry average. We’re based in San Francisco and have been featured in Forbes, US News, Business Insider for the incredible work we do for consumers. You can learn more about Ovid here.
- Lori Thomas has decades of experience as a caregiver. Her writing for SeniorAdvice.com is informed by years of research as well as hands-on family experience caring for her now late mother, who had chronic health issues for most of her life. Lori is an integral part of the SeniorAdvice.com management team, acting as Vice President of Marketing and Chief Editor.
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