The life insurance settlement industry is a lucrative market, with an estimated value of $1.7 billion. A life settlement is when somebody sells their life insurance policy to an investor, in exchange for a percentage of the policy’s face value. Since its inception, the life insurance settlement market has been dominated by brokers, but two Stanford University grads are seeking to put more power in the policyholders’ hands.
Ovid, founded by Peter Colis and Lingke Wang, is an online digital life insurance settlement exchange. Essentially, policyholders can visit the website, request a free quote, and if they are eligible, they will be put in contact with an investor. This cuts out the broker, and any fees the broker would charge, entirely. It also puts complete control into the hands of the policyholder. Both Wang and Colis believe that the life insurance settlement industry has much room to improve.
In a recent Forbes article, Colis noted that Ovid will hopefully help allow transparency and liquidity reach the secondary market. Buyers using Ovid will be able to see the bids on policies made by others as well as reveal true market prices.
According to Ovid’s official website, policyholders countrywide are losing out on billions of dollars ($100 billion to be exact) by surrendering or allowing their plans to lapse. And with using a human broker to sell your life insurance settlements, the average fee for a broker is approximately 6% of the settlement, which can be quite a bit of money, depending on the settlement. That is why Ovid has a chance to be revolutionary for the life insurance settlement industry.
You’re probably wondering why anyone would even sell their life insurance policy. Well, believe it or not, there are quite a lot of people who can benefit from settling. For the most part, people who typically settle can’t afford the cost of their premiums or do not need life insurance anymore. Others, like terminally ill patients, sell their plans in order to live a higher quality of life before they pass.
Unfortunately, this is a market with an extreme amount of potential that isn’t fully recognized. And while Ovid is not the first exchange of its kind (others have appeared, but have failed), hopefully, the startup can reach policyholders and unlock the full potential of their plans, in a way that others before never could.