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Stephen J. Shorrock has a message for people in that situation: That policy might get you some money now. In January, Shorrock, who ran Woodbury’s Bankers Life Insurance Co. of New York from 1990 to 2003 and was chief operating officer of Lynbrook’s Improved Funding Techniques, opened two Northport firms. Select Life Settlement Corporation is a life settlement brokerage and insurance consulting firm that brokers unwanted life insurance policies to a third party; LifeVentures Corp designs new insurance products and develops marketing concepts for agents. Shorrock self-funded the companies – investing in the “six-figures,” he said – and brought in a partner to focus on the life settlement side, as well as an operations manager and a marketing director, both of whom worked for him previously. The new firms, he added, were breaking even after six months. “We’re talking to insurance companies, but we have not yet found a home for these products,” Shorrock said of LifeVentures’ insurance products. “But we’re getting closer.” But Select Life Settlement Corporation is already bringing in revenue. In this market, sellers receive a lump sum payment for their life insurance policies that exceeds the cash-surrender value, but is less than the face value. People’s “insurance needs change,” Shorrock noted – perhaps their business is sold, or they’ve experienced a divorce and no longer want to pay for their policies. Big banks, insurance companies, foreign investment groups and hedge funds, however, identify these polices as an asset class and buy “a lot of these policies,” Shorrock said, choosing polices after the life expectancy of the seller is calculated. “Agents bring policies to us,” Shorrock said. “We get the medical information (on the original policy holder), package it up and send it to about a dozen providers.” The providers then market it to 50 or 60 investment groups. Shorrock said he’s currently processing nearly 40 policies and expects to close approximately 15 more by year’s end. Ultimately, Shorrock intends to broker “a couple of hundred policies a year"... Shorrock maintains that when deployed properly, this “market is an excellent exit strategy for those who don’t need their insurance” anymore. He added that sellers could put that money toward current living expenses, long-term care needs, grandchildren’s education or even charity. Charities, he added, could approach benefactors who have insurance policies they no longer need. The charity can sell the policy, or benefactors could sell it and donate the proceeds to the organization, Shorrock said. Meanwhile, Shorrock and three partners plan to purchase a life insurance company by year’s end. “We want to buy a national organization that can sell in all states and expand substantially,” he said.
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