Life Settlement Process

Although the life insurance settlements sales process may differ with each individual transaction, the following is a "step by step" outline of the life settlement sales process for structured life settlements.

Step One: The policy owner who would like to sell a life insurance policy is required to fill out an application, a "policy information release" and a "medical information release." The "policy information release" allows processors (or life settlement brokers) to retrieve information about the policy from the life insurance carrier such as the policy illustrations, premium amounts and due dates, and verification that the coverage is enforced and current on premiums due. The "medical information release" allows the processor (broker) to retrieve the last 5 years of medical information from the insured's physician(s).

Step Two: The medical information is sent to a third party life expectancy company which will issue a private report within 15 to 20 business days. This report is a broad mortality curve of 1000 people with similar age and medical condition. This report is not shared with the insured or policy owner.

Step Three: The Life Expectancy Report and the insurance information is packaged together by the viatical life settlement broker and sent to multiple institutional buyers (providers). These buyers then submit offers to purchase the policy. The processor (broker) works to seek the highest possible offer.

Step Four: Once the policy owner(s) accepts the highest offer from those offers submitted, purchase contracts will be drawn up by the provider and sent to the policy owner. The policy owner will be required to fill out and sign a change of ownership and change of beneficiary form to send to the insurance carrier. In many cases, the contract must also be signed by the policy's beneficiary.

Step Five: Similar to a real estate transaction, an escrow agent is used in the sale and change of ownership of the policy. Therefore, the Institutional buyer will send the sales proceeds to a third part escrow agent while the change of ownership/beneficiary forms are being processed by the insurance carrier. This prevents the buyer from holding the sale proceeds and the ownership of the policy. Unlike a real estate closing transaction, you will not incur any closing fees in a viatical/life settlement transaction.

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