A Hidden Asset Comes to Life
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A Hidden Asset Comes to Life. Presented by: Jim Quance The Life Settlement Alliance Inc. 2/05. THE RIGHT FINANCIAL TOOL AT THE RIGHT TIME. WHAT IS A LIFE SETTLEMENT?.

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A hidden asset comes to life

A Hidden Asset Comes to Life

Presented by: Jim Quance

The Life Settlement Alliance Inc.

2/05


A hidden asset comes to life

THE RIGHT FINANCIAL TOOL AT THE RIGHT TIME

WHAT IS A LIFE SETTLEMENT?

In its basic form, a life settlement is the transfer of a life insurance policy holder to a third party that promises to make all future payments in order to keep the policy active.


A hidden asset comes to life

POTENTIAL APPLICATIONS:

Changes in an insured’s financial condition where he or she can longer afford to pay the premiums on the policy.

When LTC or retirement income takes precedence over life insurance death proceeds.

Individuals that want to convert future life insurance DBs for current assets and uses such as gifts, charities, or investments.

Policies insuring buy-sell agreements when the owner survives or when a firm is purchased by a third party.

Unneeded group or supplemental term insurance after an individual retires.

Business owned policies on the previous owner when the business is sold.

Charities that own a donated policy where they don’t want to pay premiums.

1035 Exchange


A hidden asset comes to life

&

LIFE SETTLEMENTS

An Innovative

Wealth

Estate Planning

Tool


A hidden asset comes to life

PARAMETERS OF A LIFE SETTLEMENT

How much will be received for a policy?

There are many factors that determine the offer amounts:

Age

Premiums

Client’s Health

Type of Policy

Insurance Company Rating

Policy Size

Competitive Bidding

State of Residency

GENERAL RULE:Age, health and future premiums are the primary factors that determine the amount of the Life Settlement offer. Competitive bidding assures that you have found the highest offer.


A hidden asset comes to life

CASE HISTORY EXAMPLE 2

  • MALE – Age 65

  • $4,000,000.00 UL Policy

    • Cash Value $90,000.00

    • Retiring Executive

LIFE SETTLEMENT SOLUTION

Settlement Amount of

$525,000.00

*Received $435,000 over surrender


A hidden asset comes to life

SURRENDER EXAMPLE

  • MALE – Age 69

  • $3,000,000 Term Policy

    • Surrender Value $0

    • Client Was Going to Surrender

    • Divorce Decree

LIFE SETTLEMENT SOLUTION

Settlement Amount of

$400,000.00


A hidden asset comes to life

NEW PRODUCT EXAMPLE

  • MALE – Age 77

  • 7 UL Policies Totaling $13 Million

    • Premiums $400,000

    • Surrender Value $1.8 Million

LIFE SETTLEMENT SOLUTION

Settlement Amount of

$2,562,336.00

*Agent sold client $27mil of current generation UL and VUL policies


A hidden asset comes to life

SURRENDER EXAMPLE

  • MALE – Age 68

  • $750,000.00 Term Policy

    • Surrender Value $0

    • Client was going to surrender

LIFE SETTLEMENT SOLUTION

Settlement Amount of

$120,000.00


A hidden asset comes to life

BUY/SELL EXAMPLE

  • AGE 84 – Minor Health Issues

  • $450,000 Policy

    • Premiums $32,000

    • Buy/Sell Agreement

    • Partner Died

    • Deceased Partners • Daughter Has Policy Rights

LIFE SETTLEMENT SOLUTION

Settlement Amount of

$106,000.00


A hidden asset comes to life

APPROACHING THE CLIENT

Proactive Way to Speak

Lower Premiums/Better Policy

Better Interest Rate

Manage Expectations of Client


A hidden asset comes to life

BENEFIT TO THE CLIENT…

Pay off debt

Fund charitable gift

Cash for a higher quality of life

Create funds to invest elsewhere Cash to fund more cost effective coverage

Alternative to surrendering or lapsing a policy


A hidden asset comes to life

PRODUCERS OPTIONS…

Clients who qualify for life settlements can see what the highest purchase offer is.

If they choose to accept the payment, they have added bottom-line dollars to their asset base.

Those who don't qualify, they will find out the total liquidation value of that asset. Therefore they will be able to properly re-calculate their net worth and know their true financial picture.


A hidden asset comes to life

BENEFITS FOR

THE FINANCIAL PROFESSIONAL

  • Referral fee from the life settlement transaction

  • Trailer commission on policy for agent of record

  • Investment or annuity commissions from the capital created from the life settlement transaction

  • Commission on new life insurance products that better suits your clients current needs

  • Commission on the conversion if the policy being considered is a term product


A hidden asset comes to life

Various marketing collateral is available for the agents to use.

Registered agents can gain access to the following:

Hi-res Advertising PDF files for print, web or direct mail

Qualifying Tri-fold Brochures

PowerPoint Presentations to increase sales presentation

Custom designs can also be created for top producers.

MARKETING/ADVERTISING COLLATERAL

custom

tri-folds

Print ready advertisements

Mail stuffer


A hidden asset comes to life

FRONT & BACK-END OF A LIFE SETTLEMENT

FRONT-END: If a policy owner sells a policy to a licensed settlement provider and the transaction has been consummated in accordance with the state’s viatical and life settlement laws and regulations (front-end), the client and his insurance advisor have not participated in a transaction regulated as a security.

But most companies will consider VUL policies as securities

Because of being interest sensitive.

BACK-END: If an insurance advisor is raising funds for financing entities or reselling purchased policies to individual investors (back-end) this, according to most states, would constitute a security.


A hidden asset comes to life

DOES MY STATE REGULATE VIATICAL AND/OR

LIFE SETTLEMENTS?

Viatical/Life Settlements are regulated by state Insurance Departments. Some states have enacted statutes addressing the sale of life insurance policies insuring non-terminally or chronically ill individuals and some only laws that only regulate the sale of life insurance policies insuring terminally or chronically ill individuals and others do not regulate the transaction at all.

Of those states that regulate the transaction, most require both the Viatical/Life Settlement Broker (facilitator of the transaction) and Viatical/Life Settlement Provider (purchaser of the policy) to be licensed.


A hidden asset comes to life

LSA IS LICENSED IN THE FOLLOWING STATES…

Delaware

Indiana

Maryland

Massachusetts

Nevada

New Jersey

Oregon

Pennsylvania

Virginia

Washington

Alaska

Louisiana

Texas

ArkansasTennessee

ConnecticutUtah

FloridaWisconsin

Kentucky

Maine

Minnesota

Montana

Nebraska

North Dakota

Ohio


A hidden asset comes to life

EASY STEPS TO QUALIFY A CASE

  • Evaluate existing book of business - clients over 70 years or any clients living with a serious illness

  • Recognize changing needs or circumstances of your clients.

  • Call toll free 1.800.871.9440 or visit www.lsalliance.comfor a FREE non-binding appraisal of the policy

  • Approach client with proposal to sell their policy and purchase a product that better suits their needs

  • Client completes the application

  • LSA will provide underwriting services

  • LSA will negotiate and obtain offers or declinations

  • Total processing time is 4-6 weeks.


A hidden asset comes to life

SETTLEMENT TIMELINE

Upon Receiving the Following:

Complete application & sign authorization

Copy of photo identification

Copy of policy, if obtainable

Appraisal Process Consist of:

Collecting of policy and medical information

Complete initial underwriting of case

Send complete case to funding organizations

Negotiate and obtain offers or declinations

Communicate appraisal value and compensation

Completing the Settlement Process:

Contracts are delivered to the policy owner

Review, sign and return of settlement package

Recorded changes by insurance carrier

Escrow organization releases cash settlement to client

Client rescission period– Dependent on state

Referral source is compensated– Post rescission period


A hidden asset comes to life

  • The Life Settlement Alliance Inc. is a network of financial companies, advisors and agents whose combined efforts and strengths are used as leverage in the life settlement market.

  • The knowledgeable staff at the Alliance, utilizing their expertise in the industry, have facilitated the sale of life policies since 1994.

  • We offer a very attractive referral and incentive program. In addition, we provide marketing, advertising, and compliance support for our network of national insurance agents, producers and financial professionals.

  • For more information on LSA, contact Jim Quance at 1.800.871.9440 x 308 or [email protected]


A hidden asset comes to life

  • 200 East Broward Blvd., Suite 1135 • Fort Lauderdale, FL 33301


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