California Residents Can Now Obtain The Best Value In Life Settlements

The life settlement market is booming, with more seniors selling their existing life insurance policies for immediate, lump sum payments to gain additional cash, and make their golden years just a little more golden. In fact, the industry has grown from $200 million worth of insurance policies in 1999 to $15 billion in 2008. Unfortunately, life settlements aren't always as easy or lucrative as they sound.

By definition, life settlement brokers, the middle men in the life settlement process, are supposed to work on behalf of seniors to negotiate the highest offer for their insurance policy from buyers such as investment banks, hedge funds, investment funds and other financial institutions. Normally these brokers will raise a policy's sales price by approaching a large number of buyers and conducting multiple rounds of bidding. However, many of these brokers fall far short in fulfilling their fiduciary duty at the expense of their senior clients. An alarming number of fly by night life settlement brokers have popped up after being attracted to the lure of large commissions and relatively lax licensing requirements.

Many of these would be brokers are not actually knowledgeable enough to transact life settlements. Rather than going through the long, time and labor intensive process of obtaining competitive bids from a large network of distinguished financial institutions, many will just contact one buyer to sell a policy to as quickly and easily as possible, without their client's best interests in mind.

Traditionally life settlement broker commissions are based on a policy's death benefit, also known as the face value, so no matter what a policy is sold for in a life settlement, the broker gets a set commission. This means a broker going through all the hard work needed to get the best sales price for a client will get paid the same commission as the sketchy brokers who negotiate below market value settlement. As a result, many brokers' financial incentive to obtain the highest settlement price for a client is not always present and the process is very susceptible for misconduct.

Some states regulate life settlements, but not all of them do, and up until quite recently California was one of them. But now California residents can get the best value for their life settlements with the state's Governor signing one of the strongest laws in the nation to regulate the industry.

The 2009 California life settlement act, which goes into effect in 2010, has established strong consumer protections, including mandatory licensing of life settlement brokers and companies (no more fly by night operations), strong consumer disclosures and added measures to identify and prevent the illegal manufacturing of new life insurance policies by strangers.

By passing this new law, the state of California has helped its residents gain the best value possible when selling their existing life insurance policies. California's citizens can pursue a life settlement with the help of their life insurance agent, and life insurance companies can no longer restrict life agents from telling their clients about life settlements or otherwise act to deceive consumers in the sale of their life insurance policies.

In addition, California represents the largest life settlement market when compared with other states. So this legislation was monitored closely by senior rights advocates, life settlement industry members, consumer rights groups, life insurers and legislators/insurance officials in other states, and is bound to set a benchmark for regulatory intervention.

Selling a life insurance policy is an important financial decision to make, so speaking with a qualified settlement specialist and learning about life settlement options is essential. California residents, as well as residents all over the United States, can find a wide variety of alternatives to life settlement brokers online. These resources can help them become more informed on the process and make an educated decision on how they want to sell.

Even if your state has not passed legislation regarding life settlements, looking online can help you find a more trustworthy option. Search for a life settlement company with experience that offers you blind bidding from multiple buyers, commission refunds, full disclosure and full transparency - you'll be glad you did when you receive the lump sum payment on your policy!