How to Make Money as a Life Settlement Agent
Life settlement transactions have gained increasingly more attention in recent years, primarily due to the difficult economy and seniors looking for alternative means to fund their retirements, while being relieved of the burden of continuing to pay life insurance policy premiums. A life settlement involves an investor offering to buy a senior's life insurance policy for more than its cash surrender value. In return, the investor receives the rights to all future payouts from the policy. The life settlement agent (sometimes referred to as "life settlement provider") can make money on transactions of this type. Most life settlement agents are insurance agents who have clients who are senior citizens.
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Instructions
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Research whether life settlement transactions are regulated in your state and what regulations may be imposed on life settlement agents or providers. The Life Insurance Settlement Association provides a list of these states and the extent of regulations, if any (see Reference below).
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Apply to your state's department of insurance for any appropriate license you need or registration requirements you must fulfill in order to engage in life settlement transactions.
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Locate the list, if any, of life settlement providers, representatives and brokers who are authorized to engage in the business of life settlement transactions in your state. This list will serve as a source for leads to help you find potential investors for your clients' life policies. For example, the Texas Department of Insurance maintains such a list on its Website (see Reference below).
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Search for reputable actuaries who specialize in providing life expectancy estimates. They can provide you and your clients with life expectancy evaluations, which you can use to calculate potential life settlement offers.
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Research whether the life insurance companies you sell for have any restrictions on their agents or producers discussing or engaging in life settlement transactions with their clients. For example, some life insurers, such as Prudential Financial Inc., prohibit their agents from discussing life settlements with clients or referring them to another agent to handle the transactions. However, they place no such restrictions on independent agents who sell Prudential policies.
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Tips & Warnings
Seniors age 65 and older are the primary group of life policy holders who could benefit from life settlements, which are sometimes referred to as "senior settlements." A settlement by a terminally ill person is called a "viatical settlement," although this term is sometimes used interchangeably with "life settlement" and "senior settlement."
Do not engage in "stranger originated life insurance" (STOLI) transactions. A bona fide life settlement transaction involves an existing policy that was originally purchased to protect a family or business from the risk of a premature death. A STOLI transaction involves a senior applying for a life insurance policy with an agreement already in place to sell it to an investor. STOLI transactions are illegal in most states, and it is considered unethical for a life settlement agent to participate in them.
