The time it takes to sell a policy greatly depends on the efficiency of the selling and buying parties. In general, the overall process should take between 90 and 120 days. The first step is to assemble the necessary documents to market the policy, below: 1. Updated medical records 2. Life expectancy reports 3. A current illustration of the life insurance policy from the carrier This can take between 30 and 60 days. Next, the policy and supporting documentation is reviewed and priced in the market. This happens very quickly, typically 1 to 2 weeks, during which the selling and buying parties discuss the pricing and try to come to an agreement. After a price has been agreed upon by the seller and buyer, the closing process will typically take an additional 30 to 60 days to complete the transaction. The buyer will conduct due diligence and will request items such as proof of residency, trust documents -- if applicable, and a copy of the policy from the seller. Contracts are issued and signed by the seller. Funds are put into escrow, and the change of ownership forms are sent to the life insurance carrier. The time it takes for the life insurance carrier to process the change of ownership forms can vary; some can take up to 30 days to complete the ownership transfer. Once the ownership has changed, the funds in escrow are released to the seller. Other factors can affect the time it takes to complete the sale. For example, often sellers will use a life settlement broker to act on their behalf to conduct the sale of their policy. While life settlement brokers can provide a valuable service to policy sellers, it does add another layer of communication which can slow the process. Also, it is important for a seller to work with a buyer who is the actual source of capital for the transaction, as opposed to an entity who is merely representing an investor. A buyer who is the true source of capital is able to be more flexible and make decisions more quickly.
Posted on: Mon, 10 Nov 2014 16:00:00 +0000