How are life settlement brokers and providers compensated?
Life settlement brokers represent the sellers of policies in the market. They are typically paid a commission deducted from the total cash settlement amount offered by the life settlement provider for the policy. Though the broker is paid by the life settlement provider (out of the proceeds payable to the policy seller), it is important to remember that a broker owes a fiduciary duty to the seller of the policy, not to the provider. Life settlement providers purchase policies on behalf of life settlement purchasers who provide life settlement financing to the market in large sums. Life settlement providers, when acting as originators of life insurance policies for the life settlement investor, are paid a fee per policy purchased. This fee, often referred to as an origination fee, is usually stated as a percentage of the policy’s death benefit. The amount and conditions applicable to the payment of the origination fee are typically a key element of the origination agreement or master pu
