A recent article about selling your life insurance policy advises you to interview at least three brokers. Here’s more insight into what to look for in a broker.
- A broker with a strong sense of ethics to act in your best interest. After all the life insurance was intended for your beneficiaries, have all the avenues been explored to save the policy? You need a broker to review your policy, best by obtaining an “in force illustration”, and provide a range of alternative recommendations. Can the cash value in your policy be used to pay all or part of your premium? Can you replace your policy and use the cash value to lower your premiums or pay up a policy? This is called a 1035 exchange. Is there an accelerated death benefit to tap into?
- If you decide to sell your policy, find an broker like myself that has a brokerage agency that can shop your case for the best deal. This is tricky because every broker may brag about this, but proof is in multiple offers, and a broker’s willingness to allow enough time to see that all options are explored, rather than one who tries for the quick deal.
Personally I’m hoping the whole life settlement industry fades away. Life insurance is to project beneficiaries. Current life insurance applications specifically ask questions about selling policies to close off this type of transaction. Find a broker, like myself, who would only advise this as a last resort, rather than an broker who activity seeks out this business. They’d be much more likely to want to make the deal happen to make money as opposed to working in their client’s best interest.
update: In the case of a life expectancy of less than two years, the term viatical settlement is used. Most state require the broker to have a special life settlement life viatical license.