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Life Settlements: a Wise Investment for Uncertain Times. Presented by Life Equities Exchange, LLC. LEE Management – Joe Pinsonneault.

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life settlements a wise investment for uncertain times

Life Settlements:a Wise Investment for Uncertain Times

Presented by Life Equities Exchange, LLC

lee management joe pinsonneault
LEE Management – Joe Pinsonneault

Joe Pinsonneault is a natural, born entrepreneur. Joe has enjoyed unparalleled success in a number of ventures starting at a young age. For example, early in his professional life, Joe was the youngest Buick dealer in North America. His successes have included high-end automotive sales, real estate development (at one time owning a portfolio valued in excess of $200 Million) and investments in alternative financial products. Joe possesses the rare ability to identify financial opportunities – even in the most unstable, turbulent and daunting times.

Joe has successfully pursued a host of opportunities where others could perceive no hope. Despite the economic challenges that we have all faced, and will continue to face, Joe has found a prudent investment for today’s investors, Life Settlements. Joe contributes his considerable entrepreneurial expertise, business acumen and dogged determination to offer sound financial opportunities to individual investors who have previously been unable to participate in the life settlement market.

lee management scott kaisler
LEE Management – Scott Kaisler

Scott’s predominant business experience has been as the Director of Regulatory Risk, Compliance and Investor Due Diligence for GMAC Residential Funding Corporation for more than a decade. Scott headed a team responsible for the acquisition and management of a portfolio with an approximate value $40 Billion. The implosion of the financial services industry, turmoil in capital markets and devastation of real estate values underscored the need to find a prudent investment opportunity for turbulent economic times. Life Settlements is that product. Scott now focuses his knowledge and experience on the acquisition and management of Life Settlements for the benefit of investors through Life Equities Exchange.

Scott received his B.A., cum laude, from Butler University in Indianapolis, Indiana and his J.D., magna cum laude, from the University of San Diego in San Diego, California. He has served as a Judge Pro Tem and Judicial Arbitrator of the California Superior Court, in the County of San Diego.

about life equities exchange

LEE Identified the Need and Assembled a Team of Top Professionals to Provide the Solution for Investors:

Company born from recent economic events

Need and solution

Conservative investment philosophy

Carefully developed investment opportunity

Team of top professionals to execute strategies

the economy is our 1 concern
The Economy is Our #1 Concern
  • Job Losses
  • Foreclosures
  • Bank Failures
  • Bankruptcies
  • Reduced Income
  • Ruined Credit
  • No Retirement
concerns for investor
Concerns for Investor
  • a volatile stock market…
  • … resulting in present and potential losses
  • greatly reduced real estate values…
    • … resulting in losses up to 40%

Unpredictability and erosion of traditional investment values is the “new investment reality.”

A distressed economy has direct consequences for the investor:

costs of a safe harbor
Costs of a Safe-Harbor

Wall Street Journal, June 27, 2011

“Take My Cash Please…

…Nervous Treasurys Investors Give Up on Returns Altogether”

“Investors seeking shelter…are pushing safe-harbor yields so low that they are lending to the U.S. government for free, or even paying a small fee to do so.”

opportunity for the investor
Opportunity for the Investor

Life Settlements

The Warren Buffets of this world, the “big” investors, the hedge funds, etc. have access to alternative asset classes regular investor do not have.

One such asset class that has been available to these investors is life settlements.

what is a life settlement
What is a Life Settlement?


A life settlement is a financial transaction in which the owner of a life insurance policy sells an unneeded policy to a third party for significantly more than its cash surrender value and less than its face value.

choices for the insured choices
Choices for the InsuredChoices

If insured no longer wants or needs life insurance policy…

…he/she has 3 choices:

1. Let the policy lapse and get nothing;

2. Surrender the policy for very little cash (less than 10% of the paid premium)s; or

3. Sell it to a third party.

Benefits for the Seller/Insured:

reality check
Reality Check

This is the reality:

Insurance Information Institute 2005

a choice for the insured sale to a third party
A Choice for the Insured: Sale to a Third Party


A $1,000,000 policy – depending on the individual condition of the insured – is valued…

3rd Party Buyer

  • somewhere between $150,000 to $500,000
  • which is on average 10 – 30 times higher than the Cash Surrender Value

Sale of Life Insurance Policy to a third party means that…

benefits for the buyer investor
Benefits for the Buyer (Investor)

Life Settlements used to be the exclusive terrain for institutional investors and hedge funds.Now, they are also available for the regular investor…

…the buyer benefits from the Life Settlement in a number of ways.

He may use it as:

See how it works for the buyer in an example…

  • Straight-forward Investment
  • Wealth Preservation Tool
  • Life Insurance Substitute
  • Hedge Tool
  • Collateral for Borrowing
life settlement sample data
Life Settlement:Sample Data

Let’s work with a typical Life Settlement:

* life expectancy according to general statistical/population data

** life expectancy calculated by actuarial provider based on individual data and statistical mortality tables (for the insurance company)

  • Policy Face Value: $1,000,000
  • Policy Purchase Price: $370,000
  • Annual Premium: $40,000
life settlement as investment
Life Settlement as Investment

Here is how a typical Life Settlement works for the buyer:

…a good investment!

life settlement as wealth preservation tool
Life Settlement asWealth Preservation Tool

Traditional investments to preserve your wealth, such as real estate and stocks, have been affected by uncertainties of the financial and economic crisis. Their loss in value has been dramatic…

Real estate has lost 30 – 60% of its value over the past years

Stocks are still 20 - 30% lower than before the financial crisis

Life Settlements are unaffected by those fluctuations…

…which makes it an effective wealth preservation tool.

low risk asset
Low Risk Asset

On the Relative Risk Spectrum Life settlements range on the Low Risk end.

life settlement as life insurance substitute
Life Settlement asLife Insurance Substitute

…and live to enjoy the benefits.

Due to a number of factors (e.g., health concerns and medical conditions), not everyone is capable of obtaining life insurance for themselves at all or at an affordable price.

An investment in a Life Settlement can provide similar benefits for one’s family and possibly result in the payout of benefits while the investor is still around to enjoy them.

Buy your life insurance without applying for it…

life settlement as hedge tool
Life Settlement as Hedge Tool
  • In a volatile economy where traditional assets like stocks and real estate values have lost some of their value and where values are fluctuating a great deal, a life settlement can be used to hedge against such losses effectively.
  • Life settlement effectively counterbalance any losses resulting from market fluctuations, protecting the overall value of the portfolio from any losses.
  • It works as an insurance policy for any diversified portfolio.
life settlements the risks
Life Settlements:The Risks

All that sounds to good to be true?

Have a quick look at the principal potential risks and decide for yourself…

  • Limited Liquidity
  • Longevity Risk(= uncertainty when policy matures)
  • Additional Premium Payments
  • No Cash Flow Before Maturity

There are other potential risks. For an extensive risk evaluation please consult our Private Information Memorandum.

investment in life settlements the framework and investment

Investment inLife SettlementsThe Framework and Investment

Presented by Life Equities Exchange, LLC

lee s investment strategy
LEE’s Investment Strategy

What are the principal elements of LEE’s Investment Strategy?

  • Conservative Buy Criteria
  • Policies Vetted by Top Lawyers
  • Pooling of Similar Policies
  • 7+ Year Premium Reserve
  • Ongoing Servicing/Tracking
  • Only First-Rate Partners

Lee Has Assembled a Team of Top Professionals:

  • Premier Legal Counsel:Morris, Manning & Martin, LLP; James W. Maxson, Esq.
  • Accountants:Hutchinson, Bloodgood CPAs
  • Escrow Agent:Bank of Utah
  • Life Expectancy Providers:21st Services and AVS Underwriting
  • Trustee:Bank of Utah
lee s buy criteria buy box
LEE’s Buy Criteria(“Buy Box”)

Which Policies Does LEE Buy?

  • Top Insurance Company: Favorable rating (at least “A” from Fitch, Moody’s, A.M. Bestand S&P);
  • Policy Type:Generally, Universal Life only; no near-term policy maturity dates;
  • Age of Insured:78years of age or older;
  • Life Expectancy:Approximately 120 months or less;
  • Annual Premium Load:Annual Premiums: 4.5% (level) of face value of policy;
  • Seasoned Policy Only:Policy must be older than 2 years (=non-contestable)
policies vetted by lawyers
Policies Vetted by Lawyers

All policies are vetted & checked to make sure policies are without significant operational, reputation or potential litigation challenges.

In particular they are looking that the policies..

  • Are not contestable (seasoned more than 2 years);
  • Are no STOLIs (Stranger Originated Life Insurance);
  • Have no premium financing;
  • Don’t involve an insolvency;
  • Have no liens/encumbrances;
  • Are issued to Only U.S. resident insureds;
  • Have clean legal documentation to ensure effective transfer of ownership and death benefits;
  • Show no evidence of misrepresentations or concealment of material facts or medical conditions in application or application process.
  • Have at least two independent Life Expectancy calculations/projections provided from reputable providers.
  • No issues relative to procurement of policy from owner/insured.

What Are the Lawyers Looking For?

tracking servicing
Tracking & Servicing

How Does LEE Make Sure the Policies Are Properly Tracked and Serviced?

  • LEE engages a professional, independent third-party company specialized in the business of trackinginsured lives under life insurance policies to track and monitor the policy.
  • LEE has life expectancies on the insureds prepared by top-rated third-party companies in the business of providing life expectancy reports.
lee custom solutions
LEE Custom Solutions

LEE can provide an array of offerings to satisfy any customer demands

Product Variations: single policies, LEE trust, custom trust

Customer Variations: individual investor, wholesale distributor, corporate and institutional investors

premium reserve
Premium Reserve

Why a Funded Premium Reserve?

LEE will place a sum equal to the premium due for 7 plus years in an independent third-party escrow, and a number of other steps to…

  • assure the policies are protected and stay in force;
  • free the investor from making any premium payments for at least 7 years.
premium reserve details
Premium Reserve Details

How Does the Premium Reserve Work?

LEE has established a multilevel plan (“Premium Reserve”) in order to provide that premium payments are made until the date of maturity of the policies in the pool.

  • Placement of funds for each policy’s premiums in a premium escrow account sufficient to pay premiums for a period of 7 years.
  • An additional general premium reserve is established to pay premiums on policies not fully paid by level one. The money for the additional premium reserve is generated by the Trustee/Escrow Agent withholding 3 % of all policy cash payouts at the time of maturity.
  • Any leftover funds from unused premiums of matured policies is withheld by the Trustee/Escrow Agent and kept in the Premium Reserve.
  • On the fourth level, the compounded interest income derived from the premium reserve is withheld by the Trustee/Escrow Agent and added to the Premium Reserve.

Once all policies are paid out any unused premium reserves are distributed to the Investors.

what is the trust fund
What is the “Trust Fund”
  • Investor purchases a fractional interest in a pool of Life Settlements through a Trust Account administered by Bank of Utah (as Trustee).
  • The Trustee takes ownership of the pool of Life Settlements, for the investor as irrevocable beneficiary.
  • Upon execution of the Purchase Agreement the Trust will take ownership of such Life Settlement and issues a confirmation to the investor certifying that he/she is the irrevocable (fractional) beneficiary.
  • The Trustee’s other responsibilities are to maintain the Premium Reserve account for the purpose of making the premium payments and to disburse the death benefits in accordance with the assignments of benefits relating to that policy.
  • LEE has contracted with a well-established servicer to perform a certain post-closing policy maintenance services and, upon maturity, to file a claim for the death benefits with the appropriate insurance company.
trust fund
Trust Fund

This graphic shows how the Trust Fund works:

transaction overview
Transaction Overview

This graphic shows how the Transaction works:

  • Investment Funds placed in Escrow
  • At Closing of Escrow:- Purchase Price to Seller- Policies transferred to Trustee
  • Trustee Issues Trust Certificates to Investors
buyer qualifications
Buyer Qualifications

An investment in life settlements is not for everybody. We strongly advise and encourage you to seek the counsel of your own independent legal and tax experts before making any decision to participate in it.

You also have to qualify as “Accredited Investor” as defined in Rule 501 of Regulation D of the Federal Securities & Exchange Commission.

accredited investor requirements
“Accredited Investor” Requirements

The principal categories of accredited investors are as follows:

1) Directors, executive officers, and general partners of the issuer, including general partners of general partners in two-tier syndicating.

2) Purchasers whose net worth either individually or jointly with their spouse equals or exceeds $1 million.

3) Natural person purchasers who have income in excess of $200,000 in each of the two most recent years and who reasonably expect an income in excess of $200,000 in current year (or $300,000, jointly with their spouse).

  • A business entity will be treated as a single accredited investor unless it was organized for the specific purpose of acquiring the securities offered, in which case each beneficial owner of the security is counted separately.

If you fall within one of the above categories…

…you are qualified to invest in life settlements.

investment procedure
Investment Procedure

How can you participate?

…have a look at our Private Information Memorandum Package which contains …

Private Information MemorandumPlease read carefully through it before making any investment decision

Purchase AgreementThis is the actual contract that needs to be signed. It contains the (1) purchase contract, (2) the Investor Suitability Questionnaire, and (3) the detailed description of the policies and the pool.

Private InformationMemorandum Package

life settlements an investment for today

Life Settlements……an investment for today

Presented by Life Equities Exchange, LLC

life settlement market trends
Life Settlement Market Trends
  • Big investors have already identified life settlements as a desirable investment
    • AIG’s $8 Billion portfolio used as to repay nearly $2 Billion of “bail-out”
  • Institutional demand and appetite is growing
window of opportunity
Window of Opportunity

Opportunity previously within domain of big investors only, now available to individual investors:

  • Act before more capital enters the market…
  • … driving up prices
  • Get in early…
    • … lesson learned from mortgage and real estate

There is no better time than today…

thank you

Thank You!

Presented by Life Equities Exchange, LLC