In the life insurance settlement market, there are two primary market "players" - providers and life settlement brokers. Both have advantages and disadvantages. Be sure you know who you are working with and where their loyalties lie. Click here for the full article.
Providers are important because they purchase clients' policies. But they do not have a duty to give clients the highest offer. Rather, they are trying to obtain a policy for the lowest amount of money possible. Without competition, they have no incentive to maximize their offers to clients. This is not meant to be disrespectful, rather descriptive. When you or I are trying to buy an asset, say a car, we are not trying to purchase it for the most amount of money, right? We are trying to pay the least amount of money. The same principle applies here. By going directly to a provider, clients save broker commission, but will probably sell their policy for less than what it is worth.
Conversely, life settlement brokers introduce competition into the market, and have a fiduciary duty to clients to market their policy to obtain the highest amount of money for it that is possible. For their services, brokers are paid commission. A recent example demonstrates this point - a client went to a provider directly and received an offer. His advisor then came to us, a life settlement broker, to market the policy. We obtained $50,000 more for this client after commission. Needless to say, the client was very happy.
As you can see, providers and brokers are both important entities in the life insurance settlement market. It is important to know who you are working with, so you are aware of their role and their loyalties to clients.