Life settlement broker: How to choose the right one?

Posted: Thu Mar 26, 2009 05:33 am Post Subject:

Does your current brokerage facility offer services for life settlements? I'd start there. If that doesn't work, Milestone is a good life settlement broker. If you want to go directly to the life settlement companies (like Coventry) you can do that too, which will eliminate the commission that the brokerage facility will take and make your commissions higher. However, this can lead to problems if you don't get the offer you want because you would have a much harder time shopping the medical history to get the best offer than letting the brokerage facility do it.

Posted: Fri Mar 27, 2009 11:56 am Post Subject: Choosing life settlement broker

Goldenz has pointed it absolutely correctly; your search should begin with your agent. In case of life insurance settlement broker, its important that you find a trusted and reputable mediator to handle your account. Many a times a life settlement deal may leave the seller in distress since he may not get the deal he desired.

Remember, once you sell your life policy to the investor, you’d lose controls over it and so would be your beneficiaries. Therefore, its important to understand the pros and cons of life settlement before getting involved in it.

Posted: Fri Mar 27, 2009 12:04 pm Post Subject:

Okay, Dudley you should first contact the state insurance department and check the regulations regarding life settlement. Every state follows different rules regarding settlement. Therefore, checking with the state guidelines would help you in making the right decision.

Posted: Fri Mar 27, 2009 04:14 pm Post Subject:

First Milestone is a provider not a broker (just like Coventry). Dgoldenz is right that if you go direct to a provider (if you can) you will make more commission, but without the ability to shop the case to many providers and without the relationships you will be low balled in most cases.

Let me give some quick definitions so it is not as confusing:

Funder - this is the actulal hedge fund or institution that is putting up the money. Few if any brokers, agents, or clients have access to Funders.

Providers - Providers recieve money from funders and purchase policies from brokers, agents, and clients, with the funders money, and/or package the policies and re-sell them. Providers is who everyone is familiar with. Normally Funders are kept confidential to all parties except the provider. It is important to note that not all providers work directly with agents. This is why brokers are important.

Brokers - Brokers work with funders on the agents/clients behave and negociat the deal. It is extremely important to note that a life settlement is a NEGOCIATED deal. For example: if we get a bid from Coventry (a provider and in some cases a funder) we tell Milestone that we got a bid for x dollars and ask if they can beat it. This goes on until we get the best bid.

Agent - a life settlement agent (sometimes requires a special licence...depends on the state) works on behalf of the client.

Client - Person who actually has a policy to sell.

Hope this clears some stuff up.

If you are looking for a Life Insurance Settlement Broker make sure that they are a member of LISA (life Insurance Settlement Association), fully transparent (no side deals...this is what got Coventry in trouble), they have a lot of funding sources (ask how many providers they work with), and it helps if they also have a background in Life Insurance. You would be surprised at how many Life Settlement Brokers don't know the front from the back of an insurance policy.

Just some thoughts.

Posted: Fri Mar 27, 2009 04:17 pm Post Subject:

I always thought Milestone was a broker, I guess not. Haven't done any business with them yet, but heard good things. Thanks for clarifying that.

Posted: Fri Mar 27, 2009 04:53 pm Post Subject:

As far as we know (we are a BGA and a life settlement broker) Milestone is a Provider. The problem is there is some overlap. The industry is more or less unregulated so whomever can get there hands on a commission will do so. Let me give you an example. I can sell a policy directly to Credit Suisse but I could also sell it to Credit Suisse through 4 other providers (because the providers often overlap some of the funding sources. So if I send a cast to xyz Provider and they send it to Credit Suisse before I send the case to Credit Suisse directly then the case has to go through xyz Provider (because Credit Suisse will give the case to the first person to send it to them). Now do you think i can get a better deal going direct to Credit Suisse or but going to Credit Suisse through another provider who also wants to get paid something. This is just an example but things like that happen all the time.....you need to make sure your broker know what they are doing otherwise you may not get the best deal.....don't forget your paying your broker (in commission split) to get the best deal and supposedly get a much better deal then you could get on your own.

Also most you can get the state requirements (for agents) on the LISA website (just google LISA life settlements....cant remember what it is off the top of my head). They also provide a lot of good information on Settlements and the industry. Any reputable Broker should be following there modal.