3 Ways to Cut the Value of a Life Settlement

2. Using Non-Medical Underwriting

Make no mistake; there is a place for non-medical life settlement underwriting. It offers speed and simplicity, especially for smaller policies, and, in some instances, benefits healthy clients. To maximize a client's offer, however, there is usually no substitute for a fully underwritten case. A comprehensive review of a client's medical history, particularly for older clients, often reveals possible medical issues that even the client was not aware of.

A form of non-medical underwriting is the "quick informal appraisal" that attempts to estimate a policy's worth on the settlement market. Although that approach can offer some insight into a policy's value, appraisals are primarily prospecting tools and are no substitute for full underwriting to maximize a policy's value.

3. Failing to Monitor Term Insurance

Once a term policy is no longer convertible, it is almost impossible to market it as a life settlement. That's because the premiums become very expensive once a policy leaves the initial guarantee period, which makes the policy unattractive to investors. The ability to convert to universal life avoids those sky-rocketing premiums.

Unfortunately, many producers don't actively follow conversion period expirations on their clients' policies. For many policies, the expiration of the conversion period happens before the end of the guaranteed premium period and can easily be overlooked. So separate tracking is required.

Have you let your clients down and let them miss out on a top dollar life settlement offer?

By working with an aggressive, knowledgeable life settlement broker, you can be sure that they will leave no stone unturned to maximize the value of your client's policy.

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Robin S. Weinberger, CLU, ChFC, CLTC, is the director of national accounts for Life Insurance Settlements Inc. She has been a general agent and director of national accounts for Connecticut Mutual and vice president of marketing for Sun Life of Canada. She can be reached at [email protected] or (617) 451-3343.

Peter N. Katz, JD, CLU, ChFC, RICP, is a life settlement broker and co-director of national accounts with Life Insurance Settlements Inc. He is also a consultant specializing in life insurance advanced sales illustrations, and he has served as an advanced markets attorney and in product development. He can be reached at [email protected] or (860) 937-2936.