03/2006 presented by. what is a life settlement? 47% of seniors over the age of 65 own life...
TRANSCRIPT
03/2006
Presented by
WHAT IS A LIFE SETTLEMENT?
47% of seniors over the age of 65
own life insurance policies.
– Bernstein Research 2005
A life settlement is the sale of an existing life insurance policy that gives the policy owner a cash settlement in excess of the current cash surrender value.
Universal
Whole Life
Term
Variable
Joint
Group
Key Man
WHAT TYPES ARE INCLUDED:
Anyone over the age of 65 years who has life insurance whose circumstances have changed since the original policy was issued.
WHO MAY QUALIFY?
Health
PersonalFinancial
The Life Settlement market grew
to $5.5 Billion in face amount in
2005 thanks to available capital
and continued aggressive
marketing to producers.
– Conning Research 2005
Under-Performing Policies
Estate Size Reduction
Family Issues
Divorce or Bankruptcy
Deterioration of Health
CHANGING CIRCUMSTANCES…
Retirement
Sale of Business
Death of Spouse
Estate Tax Reform
1035 Exchange
>> PRODUCERS FINANCIAL PLANNERS ATTORNEYS ESTATE PLANNERS NON-PROFIT ORGANIZATIONS
&An Innovative
Wealth
Estate PlanningTool
LIFE SETTLEMENTS
Those who no longer need insurance
Those who are utilizing a Life Settlement
to fund an alternative investment
RECENT LIFE SETTLEMENTS
TWO TYPES OF PROSPECTS
>> PRODUCERS FINANCIAL PLANNERS ATTORNEYS ESTATE PLANNERS NON-PROFIT ORGANIZATIONS
59% of life settlement clients are
between the ages of 71-80.
– National Underwriter Magazine 2005
FEMALE – Age 72$3,000,000.00 UL Policy
• Small Cash Value
• Under-Performing Policy
CASE HISTORY EXAMPLE 1
LIFE SETTLEMENT SOLUTION
Settlement Amount of $840,000.00
*Insured purchased an annuity with the proceeds
MALE – Age 65$4,000,000.00 UL Policy
• Cash Value $90,000.00
• Retiring Executive
CASE HISTORY EXAMPLE 2
LIFE SETTLEMENT SOLUTIONSettlement Amount of
$525,000.00*Received $435,000 over surrender
MALE – Age 69$3,000,000 Term Policy
• Client Was Going To Lapse• Divorce Decree
LAPSE EXAMPLE
LIFE SETTLEMENT SOLUTIONSettlement Amount of
$400,000.00
MALE – Age 777 UL Policies Totaling $13 Million
• Premiums $400,000
• Surrender Value $1.8 Million
NEW PRODUCT EXAMPLE
LIFE SETTLEMENT SOLUTIONSettlement Amount of
$2,562,336.00*Agent sold client $27mil of current generation UL and VUL policies
AGE 84 – Minor Health Issues$450,000 Policy
• Premiums $32,000
• Buy/Sell Agreement
• Deceased Partners
BUY/SELL EXAMPLE
LIFE SETTLEMENT SOLUTIONSettlement Amount of
$106,000.00
NewBUSINESS Opportunities
Referral fee from the life settlement transaction
MULTIPLE COMMISSIONS
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
Commissions for referring other agents or agencies to Life Insurance Settlements Inc.
FROM ONE STRATEGY
SETTLEMENT TIMELINE
Upon Receiving the Following:
1. Complete application & sign authorization
2. Copy of photo identification
3. Copy of policy, if obtainable
Appraisal Process Consist of:
1. Collecting of policy and medical information
2. Complete initial underwriting of case
3. Send complete case to funding organizations
4. Negotiate and obtain offers or declinations
5. Communicate appraisal value and compensation
Completing the Settlement Process:
1. Contracts are delivered to the policy owner
2. Review, sign and return of settlement package
3. Recorded changes by insurance carrier
4. Escrow organization releases cash settlement to client
5. Client rescission period– Dependent on state
6. Referral source is compensated– Post rescission period
Powerful NewFINANCIALPLANNING
Tool…
How much will be received for a policy?
There are many factors that determine the offer amounts:
AgePremiumsClient’s HealthType of PolicyInsurance Company RatingPolicy SizeCompetitive BiddingState of Residency
GENERAL RULE: Age, health and future premiums are the primary factors that determine the amount of the Life Insurance Settlements, Inc. offer. Competitive bidding assures that you have found the highest offer.
PARAMETERS OF A LIFE SETTLEMENT
APPROACHING THE CLIENT
Proactive Way to Speak
Lower Premiums/Better Policy
Better Interest Rate
Manage Expectations of Client
Combined Strengths
Maximum Compensation
Unparalleled Expertise Since 1993
Marketing & Advertisement Support
Exceptional Service
Continuing Education Programs
LIS IS A NETWORK OF FINANCIAL
ADVISORS & AGENTS
As the industry grows, the
progression of stronger marketing
tools will be essential to educate the
consumer about the industry and the
benefits that are available.
OUR CORPORATE OFFICE IS LOCATED AT 550 WEST
CYPRESS CREEK ROAD, SUITE 300
FORT LAUDERDALE, FL 33309
Exclusive Funders
Long-Term Relationships
PROVIDER PARTNERSHIPS…
Core Competencies
Value Add
Building A Significant
Profit Center
COMPLIMENTARY SERVICE
61% of Agents stated they believe there is a substantial
potential for additional income from Life Settlements.
– Agent’s Sales Journal Life Settlement Survey 2005
No Cost
Liquidity
Fund Alternative Product
to Fit Current Needs
Relief of Premium Expense
Create a Better Solution for
their Current Needs
BENEFITS TO THE CLIENT…
EXAMPLES OF TAX BENEFITS
The following example shows a typical policy with a face value of $1 million, $55,000 of premiums paid and a cash surrender value of $70,000. For example purposes we will use a settlement amount of $200,000 paid to the policy owner. The tax position would be:
* Tax obligations will vary with the sale of an insurance policy. Life Insurance Settlements, Inc. does not make any representations as to the tax treatment of a sale of a life insurance policy. Life Insurance Settlements, Inc. strongly encourages you to consult with your tax advisor, Attorney or financial planner as it relates to your specific situation.
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.
FRONT & BACK-END OF A LIFE SETTLEMENT
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.
PREQUALIFICATION RESULTS… 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.
550 WEST CYPRESS CREEK ROAD, SUITE 300 • FORT LAUDERDALE, FLORIDA 33309TOLL FREE 866.326.LIFE • FAX 954.315.2841 • WWW.LISETTLEMENTS.COM
Disclaimer: Life Settlement amounts are based on numerous factors. The case examples are for illustration purposes and does not represent future or previous offers, statements, percentages or amounts. Actual results will vary. The industry average purchase price obtained by viators ranges from 12-24% of the face amount of a qualified life insurance policy. Some or all of the proceeds of a life settlement may be taxable under federal or state income tax laws from the sale of one's life insurance policy. Advice from a professional tax advisor is recommended. Life Insurance Settlements, Inc. is a licensed broker or producer in the following states: AL, AR, AZ, CT, DE, FL, GA, HI, IA, ID, IN, KS, MD, ME, MN, MS, NC, ND, NJ, NM, NV, NY, OH, OK, OR, PA, TX, UT, VA, VT, & WI.