3 Things You Should Know about Life Settlements
Life settlements used to have a bad reputation. And some of it was justified. At the start of the 21st century, there weren't many laws to protect seniors or investors.
But a lot has changed, and it's been for the better for seniors and their families.
Lighthouse Life's CEO, Michael Freedman, played a major role in the change we see today. For much of the past twenty years, he led the industry's efforts to become better regulated with laws that establish strong senior consumer protections. As a result, life settlements are one of the safest financial transactions in the U.S.
Over 90 percent of Americans live in the 43 states with life settlement laws. According to state insurance regulators, only two consumer complaints have been reported nationwide. And, in 2020, there is virtually no consumer litigation and there is no proposed legislation or regulation pending in the US to address any life settlement issues.
We're proud of this industry, but there is still room for improvement. For one, it can still be hard to find reliable information about particular life settlement companies and unfortunately some are not as transparent in their dealings as others.
To help you make a safe and smart decision about selling your life insurance policy, we've highlighted three of the most important things you should know about life settlements:
- Life insurance policy appraisals should be free
- There should be no hidden fees when selling your policy
- Life settlement brokers must be licensed
1. Should Life Policy Appraisals Be Free? Yes
You made the right decision for your family when you bought a life insurance policy. It was one way to protect your loved ones in case something happened to you.
But now that the kids are grown up and you are retired (nice work!), you may not need the life insurance anymore. And, you sure could do without the premiums that keep going up every year now.
Selling your policy would bring in money that can help in retirement. Plus, you won't have to pay premiums anymore.
If you're thinking about selling your policy, you'll need to have it appraised by a life settlement company to find out how much it's worth. Life insurance policy appraisals should be fast and easy. They should also be free.
You have to provide certain information to the life settlement company to begin the appraisal. An in-force illustration from the insurance company shows how much the future premiums will be. And information about the insured's health will be obtained from interviews and medical records. This should not cost you a penny.
2. Do Life Settlements Have Hidden Fees? They Should Not
A life settlement is a safe transaction. But safety also means that you should be protected from hidden fees and commissions that can sometimes be outrageous and unfair to you.
Be sure to ask the life settlement broker or other advisor you are working with how much they are getting paid for helping you sell your policy, including:
- Hidden fees and commissions – If you're working with a life settlement broker, ask how much they are making in fees and/or commissions. Anything less than full disclosure of fees/commissions is unacceptable. Likewise, make sure you have a full accounting of how much any other agents you are working with are getting paid.
- Get the best offer– Not all states require the life settlement company to put their offer in writing, so you should insist on this. If you are working with a life settlement broker, make sure they are getting bids from more than one or two buyers and are providing the same information about your policy to each buyer.
3. Must Life Settlement Companies and Brokers Be Licensed? Yes
In 43 states, life settlement companies and brokers are required be licensed. This means they must be licensed by the state's insurance department where you live. It also means they must use state-approved forms and must keep your personal information confidential. All of these laws are designed to protect you when you are considering selling your life insurance policy – a valuable asset.
As you look into which life settlement company to work with when selling your policy, choose one that is fully transparent throughout the process. With Lighthouse Life, appraisals are free and we disclose all fees and relationships. We follow all legal requirements and we exceed the law's minimum standards by providing additional transparency and senior consumer protections for those who work with us.
Read more about Lighthouse Life and to see if you qualify for a life settlement.