A transaction whereby a written agreement is solicited, negotiated, offered, entered into, delivered, or issued for delivery in this state, under which a life settlement provider acquires, through assignment, sale, or transfer, a policy insuring the life of an individual who does not have a catastrophic or life-threatening illness or condition by paying the owner or certificate holder compensation or anything of value that is less than the net death benefit of the policy.
The person who has the right to assign, sell, or otherwise transfer a policy, or a certificate issued pursuant to a group policy. This definition recognizes that, in some instances, the owner and life settlor may not be the same person under the policy.
The insured is different than the owner of the policy, although they are often the same person. If the policy is owned by a different person or entity (like a life insurance trust), both the insured and the owner must consent to the transaction and both must sign the contract.
A person who for compensation represents the life settlor, or owner in negotiations for the best offer on a policy. The broker does not buy the policy and does not work for the provider. The broker works only on behalf of the seller and owes a fiduciary duty to the life settlor or owner. A good broker is familiar with current market conditions and various providers in the market as well as what information those providers will require. Generally, the broker will gather this information and transmit it to various providers on behalf of the life settlor.
A provider is the purchaser of the policy while a broker is the representative of the life settlor or owner. The broker presents the policy to one or more providers and may offer market advice to the seller of the policy. The broker's goal should be getting the best deal for the seller. This includes negotiating on behalf of the seller, giving general market advice such as how marketable the policy is and the reputation of various providers in the industry, fairly presenting the policy to providers, transmitting all offers to the seller and helping the seller make an informed decision. Because providers and brokers perform very different roles in the transaction, you will want to ask whether the company you are dealing with is a provider or a broker.
