Looking to Buy Your FE Plans - Prevent Chargebacks to Agent

[rousemark]

I have received a call from a fellow who has been involved in the Viatical Settlement Business. He is considering expanding the business in a new direction. He is proposing for agent's to notify him of policies they are about to loose for whatever reason. He will buy the policy and continue the premium payments. If it a case that would result in a chargeback to an agent the agent will avoid the chargeback and continue to receive commission since the policy remains in force. The insured may receive a small amount of cash (more than the cash value if there were any).

What is everyone's opinion? Would any be interested in participating if the idea comes to fruition?

 

[theinsuranceman]

I have received a call from a fellow who has been involved in the Viatical Settlement Business. He is considering expanding the business in a new direction. He is proposing for agent's to notify him of policies they are about to loose for whatever reason. He will buy the policy and continue the premium payments. If it a case that would result in a chargeback to an agent the agent will avoid the chargeback and continue to receive commission since the policy remains in force. The insured may receive a small amount of cash (more than the cash value if there were any).

What is everyone's opinion? Would any be interested in participating if the idea comes to fruition?

He'd have to insist that he be made the owner of the policy. And for him to continue premium payments till death and make $$$, the company would have to lose $$$.

Then the question becomes, in a perfect world, if all policy holders pay premiums till death would the carrier make $$$? Or would carriers lose $$$ in that scenario, but because a % of policy holders lapse their policies before death, they can now make $$$?

 

[tikibarrister]

The lapse % is certainly factored into insurer's models - this would throw them off.

In the case of the stereotypical $50/mo, $10K policy, if he buys in and the insured dies 7 years later, he's put out $4200 + whatever small amount he gave the insured (a few hundred bucks?) and gets $10K. You have to factor in the time value of money and opportunity cost.

He has other risks such as fraud, contested claims, etc as well.

 

[Newby]

In order for the agent to have a chargeback it would have to be within the first 9-months of the policy. He's not going to come out doing that. He would be lucky to break even overall.

 

[rousemark]

As to whether he makes money or not is his concern. As an agent, would you refer your clients that had coverage they were going to lapse to him?

 

[rousemark]

Here is a brochure that he sent me.

www.dropbox.com/s/nncdskvz883uiql/nomorechargeback_Flyer%20%283%29.pdf?dl=0

Disclaimer; I do not the parties involved and am not associated with this company in any way.

 

[DonP]

A big part of a co's probability is the lapsing of policy's . If all clients held their policy's till death rates would be 50-100% higher than they are. I don't think many agents are going to waste their time for $100-$200 tracking a client down who's lapsing to refer them to this company . Also if a company found out what you were doing i'm sure they'd terminate you.

 

[rousemark]

A big part of a co's probability is the lapsing of policy's . If all clients held their policy's till death rates would be 50-100% higher than they are. I don't think many agents are going to waste their time for $100-$200 tracking a client down who's lapsing to refer them to this company . Also if a company found out what you were doing i'm sure they'd terminate you.

Companies do not fire you for referring clients to a viatical settlements company. And, I don't think agents get anything out of the deal except they keep and continue to earn commissions..

 

[NewbieNewbie]

Viaticals are only interested in people really sick. Not just FE sick. In addition they are going to order an aps typically which will have to be reviewed by an underwriter. I just don't see how the cost of all this makes sense on a 10k Fe policy

 

[rousemark]

Viaticals are only interested in people really sick. Not just FE sick. In addition they are going to order an aps typically which will have to be reviewed by an underwriter. I just don't see how the cost of all this makes sense on a 10k Fe policy

I don't know the answer to the profitability either. The fellow behind it is a long time forum member but he doesn't post. Perhaps he will come on and answer questions..