Why One Life Settlement Broker Is Better Than Many
It used to be that one policy deal was shopped around to the life settlements market by a number of brokers, thus allowing the policy holder and the winning broker to score a better deal. But thanks to a weakened economy, these “double bidding” deals are fast becoming dinosaurs. In a market where there are more sellers than buyers, buyers and brokers alike are reluctant to enter into multiple bidding arrangements. Fund managers are turning their backs on multiple instances of the same deal, citing the fickle nature of the deal. In this buyer’s market, one offer is taken more seriously as the fund manager understands that the offer will not be shopped around, delaying closing, and wasting unnecessary time.
If your life settlement deal is being shopped to multiple buyers by multiple brokers, you need to rethink the strategy. The life settlements market has seen an influx of sellers – so much so that even the legendary high percentage payoffs are leveling out to a lower, more reasonable return on investment. During the height of the current recession, life settlements brokers were content with payouts to their buyers ranging in the 15-18 percent range.
Savvy life settlement sellers will stay abreast of the market demands and the current accepted practices. For example, the required policy minimums have decreased. Where a policy death benefit value was once required to be at least $500,000 in order to be considered for a life settlements deal, policies with as little as $250,000 are now common. And there’s talk of some deals being made on even lower limits.
What other changes have hit the market? For one thing, buyers are expecting higher returns on their investment. Also, the higher valued policies are being passed over for smaller, more affordable ones. Moreover, the life settlements industry is facing a large aging population. As baby boomers hit the 65 and over category, more sellers are expected to be seeking out the life settlements market in an attempt to cushion the blow of 401(k) losses and retirement drains thanks to the economic downturn.
Whatever the current life settlements market condition, policy holders should not go it alone. It takes expert guidance not found in your traditional life insurance broker to understand and navigate the ever-changing market. The change to the double-bidding strategy is just one example of how quickly this market evolves. What may have been true six months ago has probably been affected by economic and legislative factors. Only a licensed life settlements broker has the ability to determine the best approach to an ever-changing market.
Give Opulen Capital a call today. Our brokers are well versed in the current legislative climate in your state, and we understand the market demands from an insider point of view. For a consultation, please call 1-877-678-5361.
