Okay okay. I have done my life insurance settlement homework and spoken to peers about it. What now? And remember, I am new to this stuff.
No one has to tell even so much as a mildly experienced CPA or non-insurance specialist such as a trust officer or family attorney what you already know: your profession involves an inherent fiduciary obligation to safeguard the assets and, to an extent, the overall well-being of your clients.
Ask anyone the hardest part of engaging in a life insurance settlement and he or she will tell you it is two-fold:knowing what to look for in terms of legitimate life insurance settlement indicators is first.
The second part is surprising; even for someone with nuts-and-bolts sales experience: overcoming your own mental roadblocks because of inexperience or uncertainty.
Access to information is speedy. Especially today, no one in the industry is without brochures, demographic data, and calculators. A good number of financial services pros are inundated with information; especially on a subject matter beyond the scope of their primary focus areas.
Hence, the following blueprint will lend a hand to the astute professional who remains in a prime position for seeing what others fail to from identifying key indicators of a legitimate life insurance settlement case.
ONE
You have to train yourself to look beyond the mental roadblocks I speak about in training seminars and trade show presentations. Namely, not having "any of those types of clients".
Are you saying you only work with young healthy people with nothing of value to have insured over their lifetime or that of their company? Or that you specialize in unprofitable corporate clients? Of course not. You may, with little effort, come to realize a number of settlement opportunities are right under your nose provided you know one when you see it.
TWO
Licensing requirements. State insurance and / or financial services departments issue such licenses according to their individual guidelines, respectively.
Always confirm your settlement broker will provide compliance guidance and support. At Opulen Capital, for example, we provide the materials necessary to comply with regulations.
THREE
Regulatory statutes / best practices. A number of registered investment advisors, CPAs, and insurance agents insist their life insurance departments prohibit life settlements.
Much of the time, however, brokerage firm, bank, and trust company insurance departments approve of the practice so long as transactions exceed suitability guidelines.
Maintaining your fiduciary obligation to act in a client's best interests must be taken into consideration. It may be necessary, at times, to make a case for employing a life settlement to a general agency or field marketing organization which may not necessarily advocate or even have a defined procedure for handling such circumstances.
FOUR
Tony Soprano or any other individual for that matter . . . is not buying your client's policy. Then who is? Heavily regulated banks and mutual funds buy big portfolios of policies the way they buy other investments. Knowledge of individual policy owners is unknown and of no concern.
The portfolio's rate of return is what's important; not any previous policy owner's personal information. Protection of such information is regulated by the Health Insurance Privacy and Accountability Act and additional overlapping regulations to protect consumers.
FIVE
Talking points. Let's say you uncover what appears to be a no-brainer life settlement candidate. Time to address such matters with your client. What to say is key. A good settlement broker will adjust to meet your concerns or comfort levels and that of your client.
A CPA or attorney may prefer direct involvement every step of the way or he or she may prefer the settlement broker accommodate the "heavy lifting."
Cases usually end up in one of three directions:
A) A policy is too healthy / too young for a legitimate settlement; case closed.
B) A policy is cash-value rich with low premiums and is the ideal settlement; case very open.
C) Somewhere in the middle; broker will request additional information and appraise the insured person in "real-time" with state-of-the-art web tool; will result in scenario A or B above within an hour.
The ability to appraise a policy and present suitable options for your client within the shortest turnaround time available is a key consideration in working with a life settlement broker.
Numbers don't lie. Not hard ones anyway. A thorough settlement broker will therefore go through great lengths to assess a given policy's settlement suitability to avoid wasting your time and that of your client.
Logistics in terms of what goes into a policy settlement's sales cycle require attention to detail, competent underwriting and valuation, and other integral components are no easy feat mind you.
In fact, be wary of the life settlement broker insisting settlement transactions are a
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