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Seller Beware ::
Need To Know!
Before you, a loved one or a friend attempts to sell a policy there are
a number of things you should know. These are some of the “old tricks”
to watch out for.
Who is actually buying my policy?
Many purchasers aren’t—they’re simply middlemen that will
collect the information needed for the purchase and pass it on to the actual purchaser at a marked up price.
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Ask
the purchaser for disclosure of his source of funds and who will own
the policy and its beneficial rights. If the information is not
immediately disclosed find a legitimate purchaser. |
“Show me the
Money”
Before you waste a minute of time, demand the purchaser prove they have
the funds for the purchase. This “proof of funds” should come from a
reputable banking institution—NOT a local attorney or accountant. “Would
be” purchasers often don’t have the money to fund the transaction;
they’re simply passing the policy on to someone else for a marked up
price. When pushed to provide proof of funds they often provide a letter
from a local attorney; if anything at all.
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Confirm that the money is in an escrow account with a reputable
banking
institution—any hesitation in providing the proof of funds is the
first sign the purchaser is not legitimate! |
“We have new
underwriting…..”
Except in very limited situations where the insured has provided updated
medical records—There is NO SUCH THING. There are companies that will
give a “low ball” offer to buy a policy. When the sales process begins
to slow down or the policy owner receives a higher offer, these
companies always come back with the response “we have some new
underwriting that will allow us to pay more.” There is no “new
underwriting.” The purchaser was taking advantage of the policy owner
and got caught.
Make sure the sale can be rescinded
In most states the seller of any asset has the right to change his/her
mind and rescind (reverse) the sale. With the sale of life insurance
policies this rescission period is normally 15 days. Never sign a sale
agreement that does not provide a rescission period. This is an old
trick played by some companies to force the seller to complete the
transaction—usually for a lower price than fair market value. |
