Before you sign anything, get written answers to twelve questions – about licensing, who represents you, total compensation, how many buyers bid, escrow, your rescission period, and your net proceeds after any loan payoff. A firm that answers all twelve plainly and in writing is behaving normally. A firm that gets vague on compensation, on how many buyers saw your file, or on who holds your money is telling you something important.
Print this page and take it to the phone call. The questions are ordered roughly the way the process unfolds, and every one of them has a right kind of answer – a number, a name, a document – rather than a reassurance.
This page is educational only and is not legal, tax, or investment advice. Pine Lake Life Solutions works with policies of $100,000 or more in death benefit and typically pays more than cash surrender value. For a free, no-obligation review, send the policy cover page or call (305) 209-7183.
In This Article
- 1-3. Licensing and Who Actually Represents You
- 4-5. Compensation – The Question Most People Skip
- 6. How Many Buyers Saw My File, and What Did Each One Bid?
- 7-8. Escrow and the Money Trail
- 9-10. Rescission and Death During the Process
- 11-12. Your Records, and Anything You Owe Up Front
- Red Flags That Should End the Conversation
- Get the Answers Before the Emotion
- Frequently Asked Questions
1-3. Licensing and Who Actually Represents You
1. What is your license number, and in which state is it issued? Most states regulate life settlement brokers and providers under their insurance departments and require licensing. Ask for the number, then verify it yourself with your state insurance department rather than taking it on faith. Requirements differ by state, so confirm what applies where you live as of 2026.
2. Are you a broker or a provider, and whom do you represent? This is the most consequential question on the list, and it confuses almost everyone. A life settlement broker generally represents the policy owner and shops the file to multiple buyers. A provider is the buyer, or represents the buyer, and is on the other side of the table from you. Both roles are legitimate. Knowing which one you are talking to changes how you read everything they tell you.
3. Do you owe me a duty, and is it in writing? In some states brokers owe policy owners a fiduciary or similar duty; in others the standard is different. Ask what duty applies and where it appears in your paperwork. "We always look out for our clients" is not an answer to this question.
4-5. Compensation – The Question Most People Skip
4. What is your total compensation on this transaction, in dollars, and how is it disclosed? Ask for the number, not the percentage, and ask whether it includes anything paid by the buyer, any referral fee, and any compensation to a third party who introduced you. Many states require written disclosure of compensation to the seller; get it regardless of what your state requires.
5. Show me the gross offer and my net proceeds side by side. The gap between the two is the whole point. A hypothetical: a $500,000 policy draws a gross offer of $80,000; a broker commission of $12,000 and closing costs of $1,500 bring the seller’s net to $66,500. If a firm can only talk about the gross number, you do not yet know what you are being paid.
Compensation is not automatically a problem – people who do work get paid. Undisclosed or vaguely described compensation is the problem. Ask for it in writing before you sign, and keep the disclosure with your closing documents.
6. How Many Buyers Saw My File, and What Did Each One Bid?
This question separates a real market process from a single-buyer transaction. Ask for a bid history: how many licensed providers received the file, how many declined, how many bid, and the amount of each bid including the final round.
Competition is where most of the seller’s leverage lives. A file shown to one buyer produces one number, and you have no way to judge whether it is fair. A file shown to a group of buyers produces a range, and the range itself tells you where your policy sits in the market. Many processes run a best-and-final round after initial bids.
If the answer is "we work with one buyer," that is not necessarily improper – but you should know it, and you should consider having the file shopped more broadly before you accept. Get the bid history in writing, dated, with amounts.
7-8. Escrow and the Money Trail
7. Who is the escrow agent, and are they independent of the buyer? In a properly structured transaction, the purchase funds are deposited with an independent escrow agent – often a bank or trust company – before ownership of the policy is transferred. Escrow releases your money once the insurer confirms the ownership and beneficiary change.
Ask for the escrow agent’s name, whether they are affiliated with the buyer or broker, and to see the escrow agreement. Never transfer ownership of your policy against a promise to pay later. That is the single most important protection in the whole process.
8. Exactly what happens between signing and funding, and how long does each step take? A typical settlement runs roughly 60 to 120 days end to end, with the longest stretches being medical record retrieval, life expectancy underwriting, and the carrier’s processing of the change of ownership. Ask who follows up with the carrier and how you will be updated.
| # | Question | What a Good Answer Looks Like |
|---|---|---|
| 1 | What is your license number and state? | A number you can verify with the state insurance department |
| 2 | Broker or provider – whom do you represent? | A clear statement of role, in writing |
| 3 | What duty do you owe me? | Cited in the contract, not described verbally |
| 4 | What is your total compensation in dollars? | A written disclosure including all parties paid |
| 5 | What is my net after compensation and fees? | Gross and net shown side by side |
| 6 | How many buyers bid, and what did each bid? | A dated written bid history with amounts |
| 7 | Who is the escrow agent? | A named, independent bank or trust company |
| 8 | What is the step-by-step timeline? | Roughly 60-120 days, with named responsibilities |
| 9 | What is my rescission period? | Specific dates written into the contract |
| 10 | What if the insured dies during the process? | Contract language you can point to |
| 11 | Who holds my medical records, and can I revoke? | Named parties, retention period, revocable authorization |
| 12 | Is any upfront fee owed? | No – always no |
9-10. Rescission and Death During the Process
9. What is my rescission period, in writing, and when does it start? Most states give the seller a window after funding to unwind the sale and return the money. The length varies by state, and some states measure it from receipt of proceeds while others measure from a different trigger – confirm your state’s rule and get the specific dates in the contract. See what a rescission period is.
10. What happens if the insured dies during the process? This is an uncomfortable question and an essential one. Before ownership transfers, the named beneficiary generally remains entitled to the death benefit under the policy. After transfer, the buyer is. Some contracts include specific provisions for a death occurring between contract signing and funding, and during the rescission window. Ask to see that language and have a family member or attorney read it too.
11-12. Your Records, and Anything You Owe Up Front
11. Who holds my medical records afterward, how are they protected, and can I revoke the authorization? The process requires a HIPAA authorization so underwriters can estimate life expectancy. Ask which parties receive records, how long they retain them, whether records are shared with buyers who declined the file, and how to revoke the authorization. A specific, revocable authorization with a defined purpose is a reasonable ask.
12. Is any upfront fee owed – ever? The answer should be no. Legitimate compensation in this market comes out of the transaction at closing, not out of your pocket in advance. A request for an application fee, an appraisal fee, a "processing" payment, or a wire before closing is a serious red flag, and it is the clearest scam signal in this industry. Do not pay it, and report it to your state insurance department.
Bonus question worth asking: who contacts me after closing, and how often? Buyers periodically verify that the insured is living, typically through a servicing company. Ask how frequently, by what method, and how to opt for contact through a family member if you prefer.
Red Flags That Should End the Conversation
Beyond the twelve questions, a short list of behaviors that should stop a process cold:
- Any request for money up front. Non-negotiable.
- Pressure to sign today, or an offer described as expiring within hours. Real offers survive a night’s sleep and an attorney’s review.
- Refusal to put compensation in writing.
- Being asked to transfer ownership before funds are in escrow.
- Vagueness about licensing, or a license number that does not check out with the state.
- Discouraging you from involving family, an attorney, or a CPA.
- Anyone offering to pay premiums on a new policy for you so it can be sold later – that is the classic stranger-originated life insurance pattern, which is prohibited or restricted in most states.
- Blank documents or signature pages with no attached terms.
You can also call your state insurance department’s consumer line and simply ask whether a firm is licensed. That call costs nothing and takes minutes.
Get the Answers Before the Emotion
People sign life settlement contracts under real pressure – a care bill, a premium notice, a diagnosis. That is exactly when documentation matters most and when it is hardest to insist on. Ask the twelve questions early, while the process is still hypothetical, so the answers are on paper before any deadline exists.
Two practical habits. First, ask for everything by email so you have a record. Second, have one other person – an adult child, an attorney, a trusted advisor – read the offer and the compensation disclosure before you sign. A second reader catches the thing you are too tired to notice.
And before comparing offers at all, make sure a sale is the right path: work through settlement vs. surrender, confirm whether your policy qualifies, and read when a life settlement is a bad idea. If you want a starting point, send the policy cover page for a free review or call (305) 209-7183.
Frequently Asked Questions
Should I ever pay a fee before a life settlement closes?
No. Compensation in this market is paid out of the transaction at closing, not by the seller in advance. Any request for an application fee, appraisal fee, processing payment, or wire before closing is a serious warning sign. Decline it and report it to your state insurance department.
How do I check whether a life settlement company is licensed?
Ask for the license number and the issuing state, then verify it directly with that state’s insurance department – most have an online lookup and a consumer phone line. Licensing requirements differ by state and change over time, so confirm what applies where you live as of 2026.
What is the difference between a broker and a provider?
A broker generally represents the policy owner and shops the file to multiple buyers, earning compensation from the transaction. A provider is the buyer or represents the buyer. Both are legitimate roles, but they sit on opposite sides of the table, so knowing which you are dealing with changes how you evaluate their advice.
Why does it matter how many buyers saw my file?
Because competing bids are where most of a seller’s leverage comes from. One buyer produces one number with no benchmark; several buyers produce a range that shows where your policy actually sits. Ask for a written bid history with amounts, including any best-and-final round.
What does the escrow agent do?
The escrow agent holds the purchase funds while the ownership and beneficiary change is processed by the insurer, then releases the money to you once the transfer is confirmed. The agent should be independent of the buyer. Never transfer ownership of your policy against a promise of later payment.
What happens if the insured dies before the sale funds?
It depends on where the transaction stands and on the specific contract language. Before ownership transfers, the named beneficiary generally remains entitled to the death benefit under the policy. Ask to see the provision that addresses death between signing and funding, and during the rescission window, and have an attorney read it.
Can I change my mind after signing?
Most states provide a rescission period after funding during which the seller can unwind the sale by returning the proceeds. The length and starting trigger vary by state, so get the specific dates written into your contract rather than relying on a general rule.
Who should review the contract with me?
At minimum, one other person who is not part of the transaction – ideally an attorney, and a CPA or tax professional for the tax treatment. Any firm that discourages you from involving family or professionals is showing you something about how it operates.
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Related Reading
- What Is A Life Settlement Broker
- What Is A Rescission Period
- Life Settlement Vs Surrender
- What Policies Qualify For Life Settlement
- When A Life Settlement Is A Bad Idea
- How To Compare Two Life Settlement Offers
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.