FAQ’s
Q. What is a life settlement?
A. It is the sale of an in-force policy where the policy owner is not terminally ill, for a lump sum amount. This amount is more than the cash surrender value but less than the death benefit.
Q. Who funds the life settlements offered through 3 Mark Financial?
A. All of 3 Mark Financial’s funders are institutional funders licensed to transact life settlement business. Institutional funders focus on the investment performance of a portfolio rather than that of an individual policy, which can help alleviate client concerns about a third-party “betting” on their life. Institutional funders must adhere to specific guidelines and underwriting practices, which have added structure, transparency and legitimacy to the industry.
Q. Who is a prospect for a life settlement?
A. While there is no “ideal” prospect for life settlements, most candidates share several characteristics. They are 65+ years old with a UL, Whole Life, Survivorship, Adjustable Life, Joint First-to-Die, Variable Life or Convertible Term Policy for which they no longer have a need. Most life settlement funders are only interested in policies with at least a face amount of $250,000. Generally, a negative change in health status since policy issue is also a positive.
Q. What reasons would a client sell a policy?
A. Some reasons include: insurance need no longer exists, other insurance fits better, the policy owner wants funds for other needs or they can no longer afford the premiums.
Q. What is the typical life settlement offer?
A. The typical offer is between 15%-40% of the death benefit. The factors affecting the offer include the premium amount, the cash value, and the age and health status of the insured
Q. What will my compensation be for a life settlement transaction?
A. The compensation varies from case to case and involves a number of factors, including the specific funder whose offer is accepted. A good rule of thumb is between 3% and 4% of the death benefit. This is only a guideline and the actual calculation will vary.
Q. How do I begin this process?
A. The first step is to identify whether your state requires a separate life settlement license. Once determined, begin identifying potential prospects from your client base and discuss the opportunity with them. When you have a prospect, contact 3 Mark Financial, and we will walk you through the process.