The investor in mature life insurance policies makes more money if the insured dies quickly.
Marketing mature life insurance policies offers growth in two ways to the clients who purchase the policies. First, these policies belong to older people with limited life expectancies; the face amounts are worth far more than the cash value and depending on the date of death, they provide a high tax-free return. These are called viaticals. The second way to make money from mature life insurance policies, besides the death benefit, is from dividends and annual growth that many policies offer that are far more than the policy payment or interest you'd receive at a bank.
Instructions
1. Check your state's laws for the requirements to sell viaticals. Some states require additional licensing of the agencies that sell mature life insurance policies. For instance, Florida passed the Viatical Settlement Act that requires brokers to follow strict rules if they sell viaticals for compensation. The state requires the company to put $100,000 into a trust with Florida, licenses, fingerprints and documentation. They also require fingerprints from brokers and sales agents as well as background checks and insurance licenses.
2. Apply for an insurance license. In most states, whether there are specific rules on viaticals or not, you must have a valid state insurance license to sell mature insurance policies.
3. Take a test for your insurance license. Most states require you to have classroom hours and then pass an insurance licensing test before you receive your license.
4. Investigate whether you'll need to apply and test for a securities license. Depending on how the company packages the policies, the state and NASD might consider it a security product. If you sell the policy bundled with other life policies and sell shares in the bundles, most likely it's a security product. Individual policies don't require a security license in most states.
5. Do not sell these policies as a sideline to your normal business, if a broker dealer holds your securities license. This is called "selling away" and is a breach of security law.
6. Check the financial viability of the insurance company before you become an agent for it. Some of the largest companies involved in viatical sales filed bankruptcy when lending became tight. Other companies are simply fronts for investment scams and sell far more shares in policies than the death benefit covers. Be careful before you begin to sell for any company in this darker sector of sales. There is an abundance of fraud in this market.
