When asked ‘Who is your Insurance Agent?’ People often answer us with their P&C agent or simply say they do not have one. An agent is only mentioned if they are trusted. This circumstance creates a tremendous opportunity for a trusted Property and Casualty Agent to both benefit their client and qualify for the Million Dollar Round Table (MDRT) with life insurance commissions as they augment their income.
Qualifications for the MDRT in 2023 are $69,000 in commissions or $138,000 in premiums. If your concentration is property insurance, you likely have literally sat across the table from MDRT qualification and the potential of an extra $100,000 of income without even knowing it.
If you are an unlicensed advisor, you can still qualify to receive a referral fee.
Many people (even advisors) still view life insurance (especially term insurance) as an all or nothing proposition. More than 90% of all term insurance lapses before ever maturing as a death claim. Term insurance is purchased to replace your income, pay off the house, and provide for your family. Term Life insurance is often used to insure business interests and continuation. Regardless of why someone purchased their life insurance, more times than not, they will eventually lapse the coverage. That is how it is designed, and insurance companies have always relied upon high lapse rates in the design and actuarial approach to products.
More than $600 billion of life insurance coverage lapses each year and way less than $10 billion is actually sold by the consumer for the actual market value. It’s estimated that around $250 billion of face amount could and WOULD be sold by consumers if they only knew about life settlements.
LIFE INSURANCE IS PROPERTY. It is as simple as that.
People generally know the value of what they own, but do they know the value of their life insurance?
John is 74 years old. He purchased a $2,000,000 convertible term life insurance policy when he was 55.
His premium for the 20-year level term was $7,000 per year and he had a preferred rating at the time of issue.
John’s home is now free and clear, his children are through college, and he has some money in the bank, but could always use more. He really does not have the need for insurance like he once did and he certainly cannot afford the new premiums on the universal life conversion, which are $70,000 each year.
Even if John’s health has not slipped, depending upon the insurance product and the underlying guarantees of the new plan to which John could convert, his policy may have value. It may only be 5% of the policy face amount, but in John’s case that would be $100,000. That $100,000 should be tax-free to John because his cost basis is $140,000 or (20 years of premiums of $7,000 each year.)
If John’s health has slipped significantly from the preferred rating he received at issuance when he was 55, there could be substantial hidden value of hundreds of thousands of dollars in the policy that was destined to lapse once his conversion period expired.
John is simply going to lapse his policy like so many others, without ever realizing that his term life insurance may have a hidden value that can be released to him as cash, today. Unless he is made aware of his options.
EXAMPLE
Age: 55 at issue
Age: 74 now
Total premiums: $140,000 ($7,000 per year)
Term Insurance cash value: $0
Cash to John: $100,000
Referral fee to agent: $15,000
First Year Premium for the conversion:
$70,000 (paid by buyer, not John)
Viatical.org is a direct-to-consumer platform that shops client-owned policies directly to funds and licensed buyers in your client’s state. There is no broker’s fee and the referral fee from the buyer network is fixed at the same rate the agent typically would get from a broker.
A very large difference in this approach versus using a broker is that your payment is a true referral fee. Many agents unwittingly form an otherwise non-existent fiduciary capacity with their client if they choose to broker or use a broker to sell a life insurance policy. You can never be assured of how widely a broker shops a policy or of what truly happens behind the scenes when selling a life insurance policy, but you are in the fiduciary food chain in the scenario. Just 2 or 3 cases like this example each year could potentially hit the MDRT level of production. Not all companies pay a conversion commission and not all cases will qualify, but many do.
Though some states have passed protection measures assuring agents that they cannot be fired for facilitating a life settlement, we still find it best to keep any advisor completely removed from the process. The insured gets direct offers from our network of institutional funds by way of a licensed buying provider in their state and you are paid a referral fee from the processing platform once the policy sells. Our network of buyers purchase a wide variety of life insurance policies as life settlements or viatical settlements, including Term, Universal Life, Indexed UL, GUL, Whole Life, and even Group Term policies.
You do not have to have a life insurance license to receive a referral fee. You need no licensing at all to make a referral. Anyone who knows someone who could qualify to sell their insurance policy can qualify for a referral fee in almost every scenario and state. If you don’t tell them, someone else will.
We will appraise a policy for free, no medical exam, no fees. Please call us and book a 30-minute call to help you get pointed in the right direction so you can benefit your clients and be rewarded for doing so.
Our proprietary platform is structured to do almost everything in an automated fashion. The process is quick, HIPAA compliant, direct, and often paperless until closing.
PROCESS
Potential Case Identified
Submit Simple Client Information to Platform.
Platform will send authorization forms (HIPAA Authorization form, Physician List form, Owner’s Authorization for Disclosure of Policy Information, and Authorization to Gather and Share Information) that can be signed by the policy owner online.
Document Gathering
We get all of the appropriate illustrations from the insurance carrier. Potential value appraisal given to the policy owner. This is a range of value depending upon health and usually takes a day after we receive the illustrations from the carrier.
If there appears to be value and the client wishes to proceed with a sale, the platform orders all of the medical records and life expectancy reports to ascertain true market value via a paperless bidding process with licensed buyers and institutional funds.
Offer and Closing
The best offer is delivered to the policy owner by a licensed closing provider in their state. Once the offer is accepted, the purchase funds are escrowed, transfer documents are generated within 2 days and the policy. Once the documents are executed, notarized, and returned to the carrier ownership is transferred.
As soon as ownership is transferred, the policy seller’s escrowed funds are released, and they typically have 2 weeks to rescind the sale.
Once the recission period has passed, the person or entity making the referral is paid a referral fee by the platform.
You should mention to each of your policy holders that life insurance is also property and may have a hidden value, especially term insurance. Make a note of the conversion deadline on their term policy and make sure to leave a solid 90 days to allow the policy to get converted and sold in the secondary market for insurance. You do not have to do the conversion; the platform facilitates that as well.
Instead of someone lapsing their term policy, imagine giving them a lump sum of unexpected tax-free cash out of nowhere, while possibly making commissions and referral fees. We’ll make you into a hero.
Each case is different. It is always best to give us a call and we can usually pre-qualify the case in 5 or 10 minutes so that you know if someone is likely to qualify or not. Please feel free to call us with any questions. It’s why we exist.