WEBVTT

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A life settlement broker represents you,

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the seller. A provider buys your

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policy for itself.

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This video is educational.

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It is not financial, tax, or

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legal advice. Citizens Life Group is

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a licensed life settlement brokerage; it

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is not a life settlement provider

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and does not buy policies.

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Reviewed by Jeffrey Hallman Sr., Florida

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License 0266. Both kinds of company

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are licensed and legitimate.

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The real question is who works

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for you when the price gets

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set. A broker is a licensed

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professional who represents the seller, owes

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a fiduciary duty, shops the policy

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to several institutional buyers, and does

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not buy the policy.

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To shop a policy simply means

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to take it to many buyers

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and ask each one what they

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will pay. A provider, also called

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a direct buyer, is the licensed

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company that actually buys the policy,

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often on behalf of large institutional

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investors. A provider represents itself, and

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it usually makes a single offer.

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The right to sell a policy

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is long settled.

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In Grigsby versus Russell, decided by

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the United States Supreme Court in

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1911, the Court held that a

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life insurance policy is property the

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owner may sell or assign like

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any other asset.

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So the question in front of

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a seller is not whether a

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policy can be sold.

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It is who stands on the

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seller's side of the table while

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the price is decided.

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Side by side, the real difference

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is representation, not upfront cost.

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Both cost you nothing upfront.

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Look at seven plain things.

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First, who they work for:

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a broker works for you, the

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seller, while a provider works for

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itself, the buyer.

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Second, the legal duty:

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a broker owes you a fiduciary

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duty and must act in your

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best interest, while a provider owes

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you no such duty.

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Third, how many offers you see:

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a broker shops the policy to

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several buyers who compete, while a

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provider typically gives you one.

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Fourth, who negotiates:

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with a broker, the broker negotiates

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for you, and with a provider,

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you negotiate alone.

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Fifth, how each one is paid:

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a broker is paid a commission

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from the sale proceeds, disclosed in

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writing first, while a provider earns

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from the spread, which is the

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difference between what your policy is

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worth to it and what it

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pays you. Sixth, the upfront cost

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in both cases is nothing.

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Seventh, the better fit:

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a broker fits when you want

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the highest competitive offer for your

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policy, and a direct sale fits

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when you already have a buyer

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you trust and want to skip

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representation. One row decides most of

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the others. When someone is legally

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on your side, the offers, the

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negotiation, and the final number tend

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to follow.

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Competition is what moves the number:

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several buyers bidding, instead of one

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buyer naming a price.

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Consider a simple illustration.

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One buyer makes a take-it-or-leave-it offer

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of sixty thousand dollars.

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After several buyers compete for the

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same policy, the offer reaches one

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hundred forty thousand dollars.

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This is an illustration of how

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competition can affect price, not an

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actual transaction or a prediction of

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your result. Individual outcomes vary with

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age, health, policy type, and market

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conditions, and not every policy qualifies

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or receives an offer.

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So why would two buyers value

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the same policy so differently?

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Because they read the same file

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differently. Buyers differ in their life

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expectancy estimates, in their cost of

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capital, and in what their portfolios

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need, so the same policy is

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simply worth more to one buyer

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than to another.

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A broker's competitive process surfaces the

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highest of those values.

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The Government Accountability Office described this

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role in its 2010 report on

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life insurance settlements:

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a broker may solicit bids from

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multiple providers with the goal of

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getting the best price for the

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policy owner. The difference is not

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luck. It is competition.

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And even after a broker's commission

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comes out of the higher number,

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a seller in this position commonly

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keeps more than the single offer

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would have paid.

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There is no guarantee in any

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individual case.

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Usually not. The commission comes out

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of a higher, competitive number, and

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it is disclosed in writing first.

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A broker's commission is a percentage

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of the offer.

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It is disclosed in writing before

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the seller agrees to anything.

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There is no upfront cost, and

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nothing is owed if the policy

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does not sell.

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Because competition usually raises the offer

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by more than the commission costs,

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the seller often nets more even

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after the commission is paid.

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The right comparison is the net,

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not the gross, and the seller

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can make that comparison because the

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commission is disclosed in advance.

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Here is the part that surprises

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people. A direct buyer also builds

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its own margin into the price

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it offers. That margin simply is

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not labeled a commission.

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So a sale with no stated

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fee is not the same as

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a higher amount in your pocket.

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One more point about money.

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Part of a life settlement may

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be taxable, so a seller should

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confirm the after-tax figure with a

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tax advisor. None of this means

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a broker nets more in every

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single case. It means the seller

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should see the disclosed commission, compare

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the net offers, and decide from

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there.

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A broker's duty to you is

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written into law.

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A licensed broker represents only the

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seller. Under Florida's Viatical Settlement Act,

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which is the part of Florida

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law that covers life settlements, a

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licensed broker is deemed to represent

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only the seller and owes a

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fiduciary duty, regardless of how the

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broker is paid.

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That rule appears in Florida Statutes

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section 626.9916,

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subsection 5, and again in the

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definition at section 626.9911,

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subsection 11. This is not only

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a Florida idea.

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The National Council of Insurance Legislators,

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through its Life Settlements Model Act,

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which was re-adopted in 2024, sets

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the same standard.

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That model law, alongside the model

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acts of the National Association of

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Insurance Commissioners, is the template most

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states follow. The Financial Industry Regulatory

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Authority describes the same split in

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its investor guidance, titled What You

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Should Know About Life Settlements:

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a broker shops your policy on

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your behalf, while a person tied

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to a single company may only

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return that company's offer.

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A provider carries no such duty

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to you. There is a related

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point for trust-owned policies.

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A trustee selling a policy held

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in trust is generally expected to

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seek competitive offers rather than accept

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the first one, which lines up

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with exactly what a seller's broker

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does. Citizens Life Group is a

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licensed life settlement brokerage that represents

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the seller.

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Selling direct can be reasonable in

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a few cases, and there is

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nothing wrong with a provider.

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There is nothing wrong with a

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provider. It is simply the other

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side of the table.

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A direct sale can make good

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sense in three situations.

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First, when the seller has already

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run a competitive process and is

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now choosing among real offers.

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Second, when the seller knows and

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trusts a specific buyer and values

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speed above the last few dollars.

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Third, when the policy is small

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enough that the dollar gap from

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competition is modest.

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Speed is a fair consideration.

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A direct sale can close quickly

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because there is only one party

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to satisfy. A competitive process takes

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a little longer because the broker

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is gathering and comparing offers.

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For many sellers, the larger number

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is worth the extra time.

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For a few, it is not,

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and that is a legitimate choice.

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In most other situations, the seller

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who lets buyers compete starts from

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a stronger position.

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And because a broker review carries

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no upfront cost and no obligation,

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most people at least find out

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what competition would produce before they

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accept a single offer.

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Before you sign with anyone, verify

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the license. Brokers and providers are

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licensed by state insurance departments.

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In Florida, a license can be

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confirmed by name through the Florida

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Department of Financial Services licensee search,

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which is open to the public.

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Ask for the commission in writing

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before you commit, so you can

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see the net offer first, not

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after. Whoever you work with, the

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same rule holds:

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a broker represents the seller, and

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a provider represents itself.

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Citizens Life Group is a licensed

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life settlement brokerage that represents the

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seller. It is not a provider,

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and it does not buy policies.

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There is no guarantee that any

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policy will receive an offer.

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What a seller can do, at

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no obligation, is learn whether competition

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would change the number before accepting

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the first one.

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This video is educational.

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It is not financial, tax, or

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legal advice. The decision about your

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own policy belongs to you, ideally

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with a licensed broker and your

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own tax and legal advisors at

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the table.