Why Life Settlements? Anthony Ridd Director of Life Settlements LifeStyle Insurance Services ext. 27

Why Life Settlements? Life Settlements help clients reach their financial goals 70% of all Life Settlements lead to the sale of additional products Life Settlement commission Life Settlements assist in estate planning applications

What is a Life Insurance Settlement? A cash payment to the owner of a life insurance policy in exchange for the assignment of ownership of the policy Payment in excess of Cash Surrender Value

Who Qualifies? Insured must be at least 65 Policy face value at least $100,000 Life expectancy less than 15 years Cash Surrender Value less than 40% of Face Value Premiums less than 6% of Face Value

What types of policies? Universal Life Convertible Term Whole Life Variable Life

Why? Insurance no longer needed Estate tax law change Reduction in estate value Family issues Divorce Insured outlives beneficiaries Buy/Sell Agreement Retirement and Key Man

Why? Insurance still needed Increase in estate value Premium too expensive Suitability Type of policy Amount of coverage For Long Term Care or other health needs Replacement of an existing policy with a new policy

LifeStyle Case # 1 Female age 79 Universal Life Face Amount: $7,000,000 Cash Value:$17,000 Offer: $1,200,000 Policy was owned by a trust Reason For Sale: Insured could no longer afford the annual premium of $250,000. She sold her policy and invested the settlement amount in a new $7,000,000 policy. Premiums for the new policy were reduced to $119,000. Agent compensation: $350,000 on settlement and sale of new policy

LifeStyle Case # 2 Male age 73 Convertible Term Face Amount: $5,000,000 Cash value: $0 Offer: $547,157 Reason for Sale: The insured owned a convertible term policy and wanted to continue the same coverage in a permanent policy but those premiums were unaffordable. The insured sold his existing term policy, which had no cash value, for $547,157. He then purchased a new $5,000,000 permanent policy with the proceeds of the settlement. Agent made: $403,000 on settlement, conversion and new policy. His renewals will be on both the conversion & the new policy

LifeStyle Case # 3 Female age 77 Male Deceased Survivorship Universal Life Face Amount: $1,200,000 Cash Value: $56,000 Offer: $370,000 Reason for Sale: The premium for the insured’s life insurance policy were expensive and becoming difficult to afford. The policy had been issued with the female at a standard rating and the male at a table 6 rating. The female insured was able to replace her existing policy with a less expensive single life policy which had guarantees the original policy did not have. Agent compensation: $66,000 on settlement and new policy.

LifeStyle Case # 4 Male age 65 Convertible Term Face Amount: $200,000 Cash Value: $0 Offer: $27,000 Reason for Sale: The insured owned a 10 year convertible term policy with three years of coverage left. At the end of the conversion period the insured decided to sell his policy for a lump sum. Agent Compensation: $6,000 on settlement

LifeStyle Case # 5 Male age 71 Universal Life Face Amount: $300,000 Cash Value: $4,500 Offer: $75,000 Reason for Sale: The insured could no longer afford the premiums for his life insurance policy and decided to surrender it. His agent informed him that he may be able to get more than the cash surrender value from a life settlement. The insured sold his policy and received more than 16 times the cash surrender value. Agent Compensation: $12,000 on settlement

Tax Chart (Seek tax advice from a professional) 10-year-old, $1,000,000 face amount policy $60,000 Cash Surrender Value $200,000 Settlement Offer Taxed as Capital Gains Taxed as Ordinary Income Taxed Basis (Premiums Paid) Cash Surrender Value (basis & earnings) $140,000 $10,000 $50,000

What to look for… A 1035 exchange of life insurance Convertible Term policies Key Man insurance policies Replacement opportunities Any policy the insured may be planning to lapse or surrender

Why LifeStyle? We use all of the major licensed institutional funding sources. Our expertise, production levels and stature in the industry enables us to get the best offer for your client. You can expect the same standards and quality of service that LifeStyle is known for.