There is a great deal of dispute regarding the ethical requirements that brokers of existing life insurance policies should be held to. In cases involving standard life insurance policies, many of those looking to sell their policies are also experiencing financial or medical hardships. There are brokers out there who take advantage of the desperation of their clients and offer a settlement payment that is far less than what is deserved, therefore padding the broker’s own pockets. Of course, in a regulated industry like life insurance, only a minority of brokers are unethical and looking to take advantage of their clients, but the stigma remains on the industry. It is therefore important to find a good broker that you can trust your financial transaction to.
Premium finance brokers are usually a step above the rest because they are dealing with more high profile clients. When the amount of money exchanging hands is as high as it is in a premium finance policy case, you can expect that the brokers in this field know that they will not be dealing with just any type of client. Even one poor referral could possibly mean the difference between staying in the brokerage business and losing credibility entirely.
The first step to finding a reputable premium finance broker is to look for a firm with experience in the business. The last thing that you want to do is to trust your million dollar plus asset to a rookie firm or broker. Also, with experience comes the possibility for reviews. Ask around and see who other premium finance policy holders have used as a broker. Make sure that the broker that you choose to work with has a clean business history (as in no complaints with the Better Business Bureau). You may want to meet with the finance broker that you are considering working with to ensure that your personalities click and that you both understand your reasons for getting into premium financing to begin with. Even if you find a broker that would be considered reputable, you want to make sure that you can get along with that individual on a more personal level. If your broker rubs you the wrong way, you may consider looking for someone that you can trust on both a business and a personal level.
Listen to the broker’s pitch very carefully. Smart people know that the sales pitch is where a broker can either shine or fail. Any indication that your broker is being misleading or untruthful with you is a sign to find a new broker. In this business the negotiation of the sale of the policy is hugely important. Even a small percentage difference can mean losing or gaining hundreds of thousands of dollars. In the death bond market (the market for life insurance policies that are not premium financed), the payout can be anywhere from 20% to 40% of the face value of the policy. In premium finance policies, this percentage should cover all of the premiums paid up until the point of sale and an overage for you to keep of at least 3%-15%.depending on your life expectancy and health. An experienced broker will be your advocate in getting as much for your policy as possible.