In recent years, Life Settlements have emerged as a good asset option.  Gradually, more and more individuals (or corporations) are finding it an advantage to sell their term or whole life policies to a 3rd party for cash.

The London Business School study has claimed that a life settlements pay policy owners an average of 4 times more than the policy’s cash surrender value.

There is still a fair amount of misleading or misinformation on the internet. Insureds get penalized for not having the right team analyze and sell their policy for the maximum amount of cash. 

A Brief Summary of the Process:


STEP 1: Basic Information Collection

This is an easy process in which the person insured completes a self-assessment health form and gives a copy of their policy to our team. Team members review the self-assessment data and contact the insurance carrier for specific illustrations of their current policy or descriptions of the conversion options if their current policy is term insurance. 

We get back to the seller to estimate their policy’s value in the secondary buyer’s market.  The estimate is based on historical life expectancy models of people with a similar medical history and the buyer’s cost to carry the seller’s insurance policy.

STEP 2: Release Forms

If the seller wants to move forward, the next step is a formal release of medical data to be sent to the seller’s physicians.   The seller needs no physical exam – this is just a request for medical records.

Obtaining the medical takes the most time. It takes 2-4 weeks to get all of the medical records from the physicians.

STEP 3: Medical Data Analysis

The medical data is reviewed and sent to an outside third party that provides an independent Life Expectancy report.  The expense of the single or multiple Life Expectancy reports is paid by the provider and broker – no cost to the seller. 

STEP 4: Auction Process

Prior to the formal auction, fee disclosure forms are signed by the buyer and seller.  The fee disclosure forms provide 100% transparency to the seller regarding what fees are charged and what people or entities will receive the sales compensation fees. It is an important step to keep details of the transaction transparent to the seller.   There are no hidden fees – everything is disclosed before the buyers set a purchase price.

Afterlife insurance illustrations requested by the buyers are obtained, and Life Expectancy reports are completed, a package is compiled and sent to the secondary institutional market – which traditionally involves 15-20 buyers.   The buyers enter an auction process that provides the highest cash purchase price for the seller’s policy.

STEP 5:  The Winning Buyer Sets Up Escrow Accounts

To protect the seller, the buyer sets up an escrow account with a national bank.  The purchase price of the seller’s insurance policy is funded into the escrow account in the seller’s name.  The national bank sends verification of the funds to the seller, and the funds are held in trust until both parties complete the transaction.

STEP 6: Transfer Of Ownership

Once the auction is complete and the escrow account is funded, a set of legal papers are drawn up that will transfer ownership of the policy to the buyer – now the new owner.  The buyer becomes the policy owner, and they will change the beneficiary of the policy to a person or entity of their choosing.

The escrow account is emptied, and the seller is paid in cash. 

STEP 7:  Optional Recission Period

The reason this step is optional is that not all states require a recission period.

The Recission period refers to a time in which the seller can change his/her mind – which includes reversing the entire sales transaction.

The purchase money (100%) is returned to the buyer, and the buyer returns ownership of the life policy to the seller.

Once the recission period is over, the life settlements transaction is final. The seller will not be able to reclaim the policy after that.


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