How Long Does a Life Settlement Take?

Did you know you can sell all or a portion of a life insurance policy, even term insurance?

(2 minute read)

Helping a senior client sell an unwanted or unneeded life insurance policy can be a life-changing event. Not only does doing so free up a client’s funds by cutting out unnecessary policy premiums, it also provides liquidity in the form of a cash settlement. However, when speaking to advisors about selling life insurance policies for their clients, we often hear the same question: “How long does selling a life insurance policy take?”

In general, life settlements can take a minimum of 90-120 days to handle from start to finish. However, there may be factors that influence the timing of a life settlement. Let’s take a look at the parties involved and what might impact how long a life settlement takes.

What Factors Can Impact the Timing of Selling a Policy?

Offering your clients life settlements is extremely easy and efficient when you work with a trusted life settlement company. Once you’ve discussed the idea of selling a life insurance policy with your clients, the company will then be given access to medical records and insurance policy information. Working with an underwriter, the company then carefully reviews the policy information, current medical conditions and applications to determine if the policy holder qualifies to enter the market. If all is in order, the life settlement company will reach out to many investment organizations (buyers) to find   competitive bids for the policy. Should the client accept the offer, the funds are placed into an escrow account until such time change of ownership and beneficiary forms are completed by the insurance carrier.  Upon confirmation of these changes to the new owner, the escrow agent will transfer funds to  the seller’s account as you, their advisor, have instructed.

There are a few different factors that can affect how long it takes to sell the life insurance policy.

Application Process

The first factor that can impact the time it takes for a life settlement is the application process. There are many factors that a life settlement advisor will take into consideration, including the type of policy, age and gender of the insured, the current health of the insured, the death benefit of the policy, possible return on investment, and other contingencies that might impact the sale.

Type of Insurance Policy

There are many different types of insurance policies that can be liquified with a cash settlement. However, several of these have their own specific restrictions and requirements. For instance, a convertible term insurance policy will have a deadline for conversion. If this date has passed or may lapse during the process, the settlement may not be able to go through.

Another example would be if a client has group life insurance, such as through an employer’s benefits program; this policy cannot be sold while the client is still employed. The point, here, is that a life insurance sale can potentially be slowed if there are issues or contingencies with the policy.

Underwriting the Policy

This is a very delicate process, which is exactly why anyone representing a life insurance settlement client should make certain they’re working with a firm   that has a talented underwriter. They will take many things into consideration, such as outstanding loans against the policy, life expectancy of the insured, death payout amount, and general health and age of the applicant.

Shopping the Policy Around

Once the broker has established the value of the settlement, they should then be working to get the best and most competitive deal. Sometimes this process moves quickly, particularly if the policy is valuable or has a high payout for the investor. Other times it may take a little bit of time to get a good offer. Regardless, this step should not be rushed.

Let Life Settlement Advisors Help You Change Clients’ Lives

At Life Settlement Advisors, we are committed to helping advisors get the best possible return for their clients on their life insurance policies. Whether you’re familiar with the market or are just getting familiar with selling unwanted life insurance policies, we’re here to help you change your clients’ lives.

Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.

Leo LaGrotte
Life Settlement Advisors
llagrotte@lsa-llc.com
1-888-849-0887

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