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Life Settlement Firms Wrestle for Your Clients' Policies

By Allison Bell

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Abacus Life is trying to get a chance to buy your clients’ unwanted, in-force life insurance policies by setting up a self-service website for the policy sellers.

Harbor Life Settlements, a life settlement broker, is working to get insurance agents’ and advisors’ attention by talking about how it pays agents and advisors.

Coventry, the life settlement industry giant, has been buying about half of the 3,000 life insurance policies sold in the United States every year.

Other firms also are fighting to capture some of that policy flow and persuade more older policyholders to sell their policies, rather than simply letting the coverage lapse.

What It Means

Clients with relatively short life expectancies and permanent life insurance policies, or term life policies that give the owners the option to convert to permanent coverage, should have no trouble attracting would-be buyers’ attention.

Abacus Life

Abacus Life is a life settlement company that recently obtained a Nasdaq listing.

It reported Monday, when it posted its second-quarter earnings, that it “originated,” or obtained, 141 life insurance policies in the second quarter, up from 135 in the second quarter of 2022.

Abacus recently set up the Abacus Marketplace, a website that clients can use to manage the process of selling their policies.

The site gives a client a way to communicate with an Abacus representative and see the data that Abacus Life uses in policy pricing.

Harbor Life Settlements

Harbor Life Settlements is trying a different marketing approach: Expanding efforts to reach out to policyholders’ insurance agents, financial advisors and other advisors.

CEO Lucas Siegel said in an email interview that life settlements can be helpful for clients who need cash.

“They can also offer financial benefits to the professionals that facilitate them,” Siegel said. “By recommending life settlements, you can earn a referral fee from life settlement companies or brokers when transactions are successfully closed. Additionally, you have the opportunity to continue earning renewal commissions on policies that might have otherwise lapsed.”

Harbor Life offers a 50% commission split, or about 18% of the typical sale price, to financial professionals who recommend Harbor Life, Siegel said.

Siegel noted that financial professionals should talk to compliance advisors before seeking compensation for life settlement referrals. Some states, including Florida and New York, regulate life settlement referral compensation.

For variable life insurance policies, Financial Industry Regulatory Authority rules may apply.

Credit: Adobe Stock

Allison Bell

Think_Allison

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