Life Settlement Mistakes

Every person selling his existing life insurance policy hopes for a quick and lucrative sale. However the actions of a policy owner, or even his advisor, can greatly influence the offer or likelihood of a life settlement successfully occurring. Unbeknownst to many there are a few major impediments that a well meaning policy owner can impart upon a transaction.

The potential problems associated with using multiple life settlement brokers have been been well documented. A policy owner should select a single life settlement broker in which they have confidence and then refrain from adding any additional confusion, such as other intermediaries, into the process. For those that don't know where to begin, there are authoritative resources available online, such as the Boomja Life Settlements Directory, with comprehensive listings of available options and vendors.

Expectations are a potential stumbling block in every transaction. If a policy owner's expectations are not in line with the market realities, a life settlement is doomed to fail. For example, a seller must be willing to accept that their policy will be subject to market forces of supply and demand. At the earliest possible opportunity, sellers should consult with their life settlement broker to collaboratively set realistic expectations for an offer. Far too often sellers will expect, and sometimes hold out for, an unrealistic offer that may never come. If a seller's expectations and requirements are unrealistic, beginning the life settlement process will be a waste of their time in addition to that of the broker's and buyers'.

Policy sellers must have realistic expectations about the time required to complete a life settlement transaction. One of the most common mistakes a policy owner can make is to poorly plan the timing of their policy's sale. Although, the impetus for a life settlement is usually a change in an estate, family or business, the policy itself must not be allowed to fall into the grace period. All to often a policy owner will stop paying premiums and then hope to initiate a life settlement. At this point, facilitating a life settlement becomes very difficult as most carriers won't provide the documentation or account changes necessary for a life settlement to occur. It is imperative to continue to pay premiums for a policy until the ownership has been changed or the prospects of a life settlement may be seriously undermined.

Failure to disclose relevant information is also a potential stumbling block for policy sellers. Bankruptcies, collateral assignments, beneficial interests, divorces, policy financing arrangements and other things materially impact a policy's value on the secondary market. Those issues usually come to light sooner or later and it is always better to address them preemptively.

When entering into a life settlement, it is imperative to be honest and forthright with your life settlement broker. Managing potential issues and setting realistic expectations on the front end of a deal makes the rest of the process much smoother for everyone involved. In the end, everyone shares the same goal of selling a policy. 

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