South Carolina Life Insurance Practice Exam

In a life settlement contract, who does the life settlement broker represent?

1. The insurance company

2. The policyholder

3. The buyer of the policy

4. The seller of the policy

The correct answer is: The policyholder

In a life settlement contract, the life settlement broker represents the policyholder. This role is crucial because the broker serves as an intermediary between the policyholder and the buyers (or investors) who are interested in purchasing the life insurance policy for its cash value. The broker’s primary duty is to advocate for the interests of the policyholder, helping them understand their options and negotiate a fair settlement. The broker works to ensure that the policyholder receives a competitive price for their policy, thus maximizing their financial return. By representing the policyholder, the broker must adhere to ethical responsibilities that include disclosing all relevant information about the transaction and helping the policyholder navigate the complexities involved. Understanding this role is vital for anyone studying life settlements, as it highlights the importance of aligning the broker’s actions with the policyholder’s best interests.