The life settlement industry has come a long way over the last few decades. Adding life settlements to the list of options allows agents to offer a broader range of services to clients.
Though the life settlement industry has been around for decades, life settlements continue to be an underutilized source of financial support for seniors who can no longer afford their life insurance policies or don't need them.
Due to common misconceptions, including that life settlements are only for the terminally ill, many of today's insurance agents neglect to inform their clients of this option. This is despite the fact the industry is established, highly regulated and can offer much-needed financial relief to older Americans concerned about their retirement and long-term care expenses.
As an insurance agent whose job is to assist clients in living more secure and financially stable lives, it makes sense to offer them a life settlement as an option. Here are three reasons to keep life settlements in mind for customers:
1) A safe and highly regulated option. When it comes to checks and balances, the life settlement industry has come a long way. Today, the industry is highly regulated, providing more transparency for policyholders and protecting insurance carriers.
The industry has greatly evolved over the last three decades. This evolution is a result of state laws regulating the industry as well as the development of industry best practices. In 2000, the National Conference of Insurance Legislators (NCOIL) adopted the Life Settlements Model Act, which has been revised over the years and remains in force. The act sets guidelines for avoiding fraud and ensuring sound business practices.
2) Agent fiduciary responsibility. A life settlement can provide clients with financial relief, and it's an agent's duty to inform them of such an option. Simply knowing that a client is eligible for a life settlement but may be unaware of it makes an agent responsible for sharing this viable option.
Legal precedent regarding the fiduciary responsibility of life insurance agents to inform their clients of life settlements was set in California in 2014 when a couple filed a class-action lawsuit against Lincoln National Life Insurance Company for failing to disclose that life settlement was an option.
3) Beneficial to clients and agents. A client's best option may be to receive financial assistance through a life settlement. An agent can best make this determination after reviewing the benefits and drawbacks for the client as well as other options, such as surrendering for cash value.
When recommending a life settlement for a client, an agent should work with a life settlement broker rather than a life settlement provider. A broker's fiduciary responsibility will be to your client. Additionally, ensure the client fully understands the ramifications of a life settlement.
The life settlement industry has come a long way over the last few decades. Adding life settlements to your recommended options allows you to offer a broader range of services to your clients.
Lucas Siegel is founder and CEO of Harbor Life Settlements and Suncrest Benefits.