8 Questions to Ask Before Signing With a Life Settlement Broker

Rebecca Parson
Rebecca Parson

Rebecca Parson

Author

Rebecca Parson is a financial and tech writer with 10 years of experience writing about topics such as life insurance, commodities investing, and the SaaS industry. She has a master’s degree from Johns Hopkins University and a bachelor’s degree from the University of Mary Washington. Her writing has appeared at money.com, sacbee.com, cart.com, herodevs.com, blanchardgold.com, and more.

Brian OConnel
Brian OConnel

Brian O'Connel

Contributor

Brian O’Connell has been a contributing writer for U.S News & World Report since 2016. A former Wall Street bond trader and the author of two best-selling books; “The 401k Millionaire” and “CNBC’s Creating Wealth”, he has 20 years experience covering business news and trends, particularly in the business and financial sectors. He believes education is the best gift a financial consumer can receive – and brings that philosophy to every story he writes. His byline has appeared in dozens of top-tier national business publications, including CBS News, Bloomberg, Time, MSN Money, The Wall Street Journal, CNBC, TheStreet.com, Yahoo Finance, CBS Marketwatch, and many more.

By Rebecca Parson, Brian O'Connel
Author, Contributor, Life Insurance

Many seniors discover they can convert their life insurance policies into immediate cash through a process called a life settlement. This involves selling your policy to someone outside the original insurance provider, often a company specializing in such transactions. In exchange, you receive a lump sum payment upfront.

Before moving forward with a sale, you’ll want to grasp the specifics of your current policy, examine any offers carefully, and understand how brokers facilitating these deals are paid. This knowledge is key to protecting your interests.

Below are questions we recommend you ask a broker before selling your life insurance policy.

8 Questions to Ask a Life Settlement Broker

Question #1: How Much Can You Sell My Life Insurance Policy for?

A broker can estimate the sale value of your policy. While he or she isn’t the buyer, with some information about your policy, health, and other information, the broker should be able to give you an estimate. Many brokers use software to predict buyer pricing, and they should be willing to share their findings with you so your expectations align.

Keep in mind that policies always sell for less than their full value.

Question #2: How Does Your Exclusivity Period Work?

Reputable brokers will ask you to sign an exclusivity agreement because they’ll be putting time into selling your policy. So they’ll want to be sure you won’t try to sell it with another broker or sell it yourself. 

It’s important to know how long this period lasts and the options if your policy doesn’t sell. Terms vary; six months is common, but some brokers might request more. During this time, selling your policy through another channel is off-limits.

Exiting this agreement early isn’t usually possible. Brokers invest thousands of dollars into marketing your policy and aim to recoup these costs.

Question #3: What Are Your Fees?

Before signing a contract, talk about the broker’s fees. While rules limit these charges, negotiation is possible before contract signing. Knowing what will be taken from your policy’s sale price is key. Fees usually range from 15% to 30% of the sale.

Be aware that if a financial advisor refers you to a broker, they might get a share of the negotiated fee. The final paperwork shows the total broker fee but not the split between the broker and advisor.

Question #4: What Is Your Response Time?

Prompt communication is essential during the life settlement process. With frequent updates and changes, especially concerning policy details and your health, your broker should keep you informed in a timely manner.

Find out what response time your broker commits to — if you leave a voicemail or send an email, how soon will he or she respond?

Question #5: How Big Is Your Network of Life Settlement Buyers?

A large network of buyers leads to better offers for you. Some brokers work with just a few buyers, which might mean you get an offer sooner, but it’s not in your best interest to be rushed into selling to a small, hand-picked list of buyers.

Trustworthy brokers present your policy to a wide range of buyers, from large hedge funds to smaller firms that purchase fewer policies annually. This approach ensures more competitive offers for your policy.

Question #6: What Criteria Do Buyers Use to Evaluate My Policy?

Understanding the factors that influence buyers’ decisions can give you insight into how your policy will be valued. Ask about the role of age, health, policy size, and type in determining the offer.

Question #7: Can You Provide References or Testimonials from Previous Clients?

References or success stories from past clients can provide reassurance about the broker’s credibility and effectiveness. Ideally, you can speak directly with the broker’s past clients to get their references.

Question #8: How Long Will It Take to Receive My Payment?

Asking about the expected timeline from listing to sale can help you plan for your financial needs and set realistic expectations. The process can vary from a few weeks to a few months, so get clarity from the start.

Sell your life insurance policy for cash.

See if you qualify now.

We’re here to help. Speak with a Policy Specialist today at +1 848-456-8333