It is a sad fact of the life insurance industry that many policyholders rarely, if ever, hear from the person that sold them their policy.
The thousands of abandoned buyers, who no longer have a relationship with the person who sold them their policy, are known as "orphan" policyholders.
As a result of this neglect, the day will likely come that they are going to be unpleasantly surprised by news that their policies are not performing as illustrated years before.
Although, they've diligently paid their premiums for many years, no one has been monitoring the performance of these policies.
Suddenly, they are informed by the insurance company that their policy will lapse unless they start paying substantial additional premiums.
While many orphaned policy owners are the result of producers who have left the business, others are orphaned because agents change companies or focus on financial planning activities other than life insurance.
Orphaned policy holders can make great prospects for life settlements because they are frequently seniors who own troubled policies.
Life settlements are an alternative to lapsing or surrendering a policy where the policyholder gets more cash than they would get from the insurance company.
The settlement value is based on many things, but the two main factors are the life expectancy of the insured and the cost to keep the policy in force.
Here are two examples of orphan policyholders who benefitted significantly from a life settlement:
1. A Male, Age 86.
Bought a $650,000 policy in 2003
He had been paying $7,500 per quarter and then, totally unexpectedly, got "the letter" saying that it was no longer enough.
There was no cash left in the policy and it was going to lapse unless he started putting in substantially more premium (about $13,000 per quarter), which he could not afford to do.
Upset, he called his writing agent and found out he was deceased, but his son had taken over the business.
He introduced the client to the possibility of a life settlement and the policyholder was excited to see if he would qualify.
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 
