In earlier articles, together with “Life Insurance coverage Coverage Themes for 2023,” I prompt that if the life insurance coverage discourse, which I broadly outlined in that article, have been to maneuver on from the “why to purchase” to the “learn how to purchase,” there’d be extra shopping for. Equally, the life settlement discourse, additionally broadly outlined, would possibly need to contemplate the identical suggestion. Which means much less discuss why to promote a coverage and extra about learn how to promote it. Emphasis on the latter, particularly emphasis on the function that each the brokers and the shoppers’ advisors play in these transactions, might show to be, nicely, transformative.
As a part of my contribution to this enlargement of the discourse, I wrote “A Program on Life Settlements for Brokers within the Superior Markets.” I’ll now observe that article with a set of questions that advisors ought to ask life insurance coverage brokers who suggest a life settlement and, conversely, brokers must be ready to reply or, in a special setting, use in a presentation on life settlements. Both manner, these are factors that I consider are noticeably absent from in the present day’s discourse, which, in flip, retains the discourse in advertising and marketing mode versus a a lot wanted advisory mode.
A Widespread Setting
You’re an property planner with a rich clientele. You get a name from a shopper’s long-time funding advisor, who needs to convention you in with the shopper’s tax advisor. The subject is life settlements. Apparently, the shopper had a dialog with a life insurance coverage agent about promoting a big coverage. This isn’t the agent who bought the coverage. He’s a successor, whom the shopper actually doesn’t know all that nicely. Anyway, the shopper has requested the funding advisor to collaborate with you and the tax advisor to speak with the agent. “Examine this factor out,” instructed the shopper, “Do some excessive degree reconnaissance and get again to me.”
The Advisors Confer
The shopper advised the funding advisor that, whereas intrigued with the opportunity of unloading his “inexplicable common life” coverage, he has loads of questions on life settlements on the whole, how this agent would deal with the transaction and, in fact, whether or not within the chilly mild of day he ought to promote the coverage or determine learn how to retain it. Whereas he’d like his advisors to work as a group, he’d favor that one of many three be the first contact with the agent and, if issues get that far, assist him make an knowledgeable resolution. That “level individual” would additionally maintain the trustee of the shopper’s irrevocable life insurance coverage belief (ILIT) within the loop, because the trustee would truly be the vendor. Anyway, with a wry smile that may’t be detected on the convention name, the funding advisor tells you that she and the tax advisor have nominated you to be that time individual. No marvel they didn’t do a video name!
You understand the opposite advisors nicely, primarily since you’ve labored with them on this shopper and others for years. So, the dialog flows properly, with every providing loads of options for what must be on a listing of questions that you simply’ll ask the agent on a name or at a gathering. As you’ve apparently additionally been nominated because the group’s scrivener, you’re tasked with placing collectively a draft of the listing and circulating it for remark by these advisors and the trustee of the ILIT.
The First Draft
It takes solely a few days to do the draft, flow into it and get feedback again. Right here’s the present model of what you’ll ask the agent, “conversationally annotated” for now till you finalize the questions:
- Keep in mind that the three of us aren’t in your corporation and have restricted familiarity with life settlements and the related practices, procedures and terminology. So, you’ll have to regulate the tempo and tenor of your responses accordingly. In different phrases, be affected person with us.
- We clearly assume that you simply’re absolutely licensed and credentialed within the life insurance coverage enterprise. Are you licensed to do life settlements? If not, why not? Simply curious.
- What life settlement corporations do you’re employed with for a coverage just like the one our shopper’s ILIT owns? Why do you’re employed with them? What’s it about their platform, course of, personnel, sources, communication, expertise, assist and outcomes that distinguishes them from their competitors?
- We’d additionally wish to know which corporations present the life expectancy reviews to your life settlement corporations.
- In case you work with multiple life settlement firm, how do you select which firm to interact for a selected policyholder or coverage?
- What number of life settlement circumstances have you ever dealt with all over? What are the biggest insurance policies you’ve got put by means of the method? What number of of these insurance policies have been owned by ILITs? What number of of these ILITs had unbiased company trustees?
- At this juncture, the shopper is simply fascinating in studying if the coverage is marketable, what sort of provide he would possibly count on, and many others. Will he incur any price or obligation related to this exploratory course of?
- Stroll us by means of the steps and time-frame of a typical life settlement transaction from begin to end.
- Usually talking, what are the factors and parameters that consumers contemplate as of late when making (or not making) affords?
- We assume that not all conditions go full course to a sale. What are a number of the causes that the method doesn’t get to fruition?
- We’ll discuss additional about this, however for now, how would you describe the function of the shoppers’ numerous advisors in these transactions? What about trustees?
- Let’s discuss your function within the life settlement course of. Assume {that a} policyholder has indicated at the least some reluctance to keep up a coverage. Assume additional that, for sake of dialog, it seems that each the insured and the coverage counsel that there’s at the least a foundation for dialogue about life settlement.
- How do you “tee up” the life settlement dialog? Assume first that the policyholder says they don’t suppose they want the coverage anymore. Then assume the problem isn’t want, it’s price or affordability. In every case, what questions do you ask the policyholder? What steps do you are taking and what sources do you utilize to assist the policyholder come to an knowledgeable conclusion on “want”? On affordability?
- As soon as the method is underway, how do you act because the policyholder’s advocate within the transaction? What worth do you add within the course of? Do you monitor the method and problem one thing that doesn’t appear truthful or right? Give us some examples of the place and the way you interceded on behalf of the policyholder and/or acquired a policyholder a “higher deal” than what was initially provided.
- How would you show that the provide introduced by the life settlement firm was nearly as good (or higher) as any that may be within the offing?
- How do you talk with and assist a policyholder’s advisors? Please give examples, together with any sources you present that assist the policyholder’s tax and funding advisors work with you on a “maintain vs. promote” evaluation on an after-tax, after-fees foundation.
- What particular data or companies, if any, have you ever discovered to be useful to company trustee policyholders who’re contemplating a settlement or evaluating a suggestion?
- How can we be useful to you in the middle of the transaction? For starters, wouldn’t it be productive for us to arrange a dialog among the many shopper, you and the three of us the place you would cowl loads of these factors?
Sensible Steering Wanted
As I’ve tried to clarify in earlier articles, life settlements might be an integral part of many consumers’ planning, in addition to many brokers’ enterprise fashions. However the discourse has to maneuver on from advertising and marketing platitudes to sensible steering for policyholders and their advisors. Hopefully, this modest contribution is an impetus for motion in the correct course.
