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How Life Settlement Buyers Determine What Your Policy Is Worth
By Saul L. Appel, CLU®, ChFC®
Life settlement buyers do not value a policy by looking only at its cash surrender value. They analyze the policy as a long-term financial obligation and estimate the cost of keeping it in force until the death benefit is paid.
The most important factors generally include the insured’s age and health, the policy’s death benefit, the premiums required to maintain coverage, the type of policy, the insurance carrier, and any loans or other policy charges. Buyers also review current illustrations and in-force ledgers to understand how the policy may perform under different assumptions.
Health information matters because it helps buyers estimate life expectancy. Premium efficiency matters because every future premium reduces the buyer’s potential return. Two policies with the same death benefit can therefore receive very different offers.
Market competition also affects value. One buyer may decline a case that fits another buyer’s investment criteria. That is why a policy should be presented accurately and, when appropriate, to multiple qualified buyers.
No legitimate professional can promise a specific offer before completing the review. The first step is to gather the policy documents and basic health information so the market value can be evaluated responsibly.
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Saul L. Appel, CLU®, ChFC® | President, Appel Financial, Inc. | 50+ years experience