Trust Life Settlements says death benefit does not set a policy’s sale price

Trust Life Settlements, LLC is telling policyowners that a life insurance policy’s death benefit is only the starting point for a life settlement. The Orlando broker says age, health, future premiums, underwriting assumptions and transaction costs can all change what a seller may net.

Why it matters: - Policyowners comparing a potential sale need to separate face value from cash value. - Two policies with the same death benefit can still produce very different offers. - The gap affects how much a seller may actually keep after broker compensation and transaction costs.

What happened: - Trust Life Settlements, LLC, a life settlement broker in Orlando, is highlighting why a policy’s death benefit does not determine its life settlement value. - The company says it is expanding on valuation questions after introducing a published five-tier flat-fee broker model in September. - Trust Life Settlements says policyowners should compare three figures: death benefit, gross settlement offer and estimated net proceeds.

The details: - A life settlement offer reflects what a buyer will pay today to acquire a policy and take on future premium obligations. - Policies with the same face amount can have different future premiums, funding needs and performance characteristics. - The insured’s age, health and estimated life expectancy affect buyer evaluations. - Institutional buyers may use different underwriting methods, premium assumptions, portfolio goals and target returns. - Trust Life Settlements markets qualifying policies to multiple institutional buyers to seek competitive offers. - The company says its Life Settlement Calculator provides a preliminary educational estimate, not an offer or guarantee. - Actual offers depend on buyer review of the policy and underwriting information. - Trust Life Settlements says policyowners should use its Net Settlement Test: Gross Settlement Offer minus broker compensation minus applicable transaction costs equals estimated net proceeds. - The company uses a published five-tier flat-fee brokerage schedule, and the fee tier is based on settlement proceeds rather than the policy’s death benefit. - The National Association of Insurance Commissioners defines a life settlement as a sale to a third party for cash below the full death benefit, with the buyer paying future premiums and receiving the death benefit later. - The NAIC also advises consumers to consider tax consequences, effects on public assistance benefits and the handling of personal and medical information. - Policyowners can access the calculator at the life settlement calculator.

Between the lines: - The message is meant to reset expectations for sellers who may assume a larger death benefit automatically means a larger offer. - Competitive bidding across multiple institutional buyers can change pricing, but it does not ensure a sale or any particular price. - The emphasis on net proceeds suggests the company wants policyowners to focus on take-home value, not headline offer amounts.

What's next: - Policyowners considering a sale can request an individualized evaluation after using the calculator. - Trust Life Settlements says it will continue marketing qualifying policies to institutional buyers and using its flat-fee compensation structure. - The company says it is licensed in Florida and serves clients nationwide, working with appropriately licensed brokers or other licensed parties where required. - More information is available at the company’s announcement.