| Life Settlement |
The life settlement industry was born out of necessity; not convenience. The Life Settlement industry is an offshoot of the old viatical marketplace that virtually imploded when HIV and various other terminal medical aliments turned out to be not so terminal!
The Life Settlement industry today has been in existence for about the last decade or so and is being continually refined and individual states, insurance companies and broker-dealers are now setting parameters for their given situations. Some insurance companies refuse to see the benefit of the Life Settlement industry and prohibit their agents from offering a Life Settlement to the client. Broker-Dealers (B-D's) suffer a similar short sightedness by prohibiting their registered representatives from participating in the marketplace. Though more and more B-D's are changing to acceptance of Life Settlement's being a valid part of a particular financial plan.
The options to the client are sparse without due consideration towards Life Settlements as most client's want more than their cash value if they learn their life policy is worth more in the settlement marketplace.
Term insurance life policies may also be considered for Life Settlement and they have NO CASH VALUE!
In some cases it may be best for the client to consider a reduction in the face amount to lower premium costs. In other cases, the client wants to use the proceeds from the old policy to purchase a newer policy form and pocket the difference. While others just want the cash liquidity and to no longer pay the premium.
Rarely is it in the client's best interests to surrender the policy to the issuing carrier or take extended term.
For brokers who simply refuse to see the merits or who are restricted from participating in the Life Settlement marketplace we simply ask that you treat your client as you would your own family member ... or yourself!
And to the Life Settlement industry's credit they have incepted a form of their own regulation through LISA (Life Insurance Settlement Association).
The bottom line? The Life Settlement industry has no place to go but UP! With over 9 trillion dollars of life insurance face amount in force in this country if only 5% to 10% goes to settlement the numbers become staggering.
Testimonial:
"Being a high volume broker with large cases that need special attention... I hesitated for a few years before starting to work with Cornerstone Financial Services, Inc., and looking back, I wish I had not. Their expertise, specifically in the large case arena that require intensive follow through is unsurpassed! They are a really refreshing change and an absolute pleasure to do business with."
--Dick C., Concord,MA
Who Qualifies?
Or should we say "How does a client qualify?" The fact is the marketplace has undergone some serious contractions. From rooting out STOLI ( stranger owned life insurance) contracts, to the unexpected INCREASES in mortality by several LE (life expectancy) firms to the massive liquidity drying up overnight ... all spelled trouble for the Life Settlement industry and literally redefined who the providers are seeking to make settlement offers on.
The classic candidate is any one past 63 or so who has had a CHANGE in health status and whose longevity is now shortened because of the health event.
Without the impaired health, most providers are passing on healthy 75 and 80 year olds, as the numbers just do not make sense. And the providers represent the purchasers and if the numbers do not show a minimal expected return on the cash outlay to purchase the policy-then the provider will 'pass'.
As would you or anyone else expecting a return on investment.
Testimonial:
"Cornerstone is always there to help ... whether it is in case preparation, tracking business, or simply being our "go between" with the various home offices. Thank you, all the good people at Cornerstone!"
--Doug M., Aurora, CO
How Do I Get Paid?
Good question. Whether you are the client seeking to settle your life policy directly through us; or you are the broker representing a client for a Life Settlement, receiving adequate payment for your client is the critical component in the process.
Our model came about because of several states mandating that the process and offers be known to all parties.
We agreed and decided if one our parents or siblings came to us-what would the transaction look like? How would we treat them?
For the client who comes to us directly WITHOUT a broker the process is simple:
- We advise you immediately if you have a policy that would be desirous for most providers.
- We gather the necessary medical records.
- We share the LE (Life Expectancy) results as we receive them; assuming you wish to know.
- We disclose all offers as the process unfolds.
- We guide you through the paperwork process once you have accepted an offer
- You receive 90% of the offer amount less any medical record costs, LE costs and other pertinent costs; should there be any.
- We retain 10% of the offer amount as our payment for services rendered.
To us, this was the fairest model as we would place our own family through this model for Life Settlement.
Testimonial:
"I have done business with Cornerstone Financial Services for more than five years. I am pleased to report that all business has been conducted in a highly satisfactory manner. The staff has always been most helpful in providing information and advice for my cases. With some of my more difficult insurance cases, where most other agencies would make excuses or just give up Cornerstone has found creative ways to see these cases through to completion."
--Joel S., Coral Springs, FL
What If I am a broker representing a client for Life Settlement?
The process remains the same as if the client came direct ( see 'How do I get paid?' tab) except for the compensation.
Obviously the broker must be paid in which case the client would receive 80% of the offer less the applicable settlement costs.
You, as broker for the client, would receive 10% and we would receive the other 10%.
Now we know what you are thinking. Only 10%? Yes and here's why:
- Most wholesalers choose to selectively share information with you.
- Of the offer amount, typically 60% to 70% is going to your client. You share in the remaining 30% to 40% not paid to your client.
- Your portion is typically 25% to 30% of the amount withheld. For example; On a $100,000 offer to your client, the client receives $60,000 to $70,000. You receive 25% of $40,000 or $10,000. You might receive as much as $12,000 if your share is 30% or even $15,000 if they share a higher percentage.
- Our model dictates your payout is 10% of the example above or $10,000.
- We search out all the best offers from our provider network.
- A note of caution; if you have already started shopping your client's policy through other wholesalers, please inform us immediately as we may not be able to help you. Most wholesalers deal with the same providers.
- The significant difference is simple-do you genuinely wish to do the best job possible for your client while at the same time being fairly compensated? If so, we await your call. 1-800-682-7174
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