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“All the Benefits of Dozens of Relationships with One Simple Application” Presented by Life Insurance Settlements Inc. 05/2005 WHAT IS A LIFE SETTLEMENT? 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. WHAT TYPES ARE INCLUDED: Universal Whole Life Term Variable Joint Group Key Man WHO MAY QUALIFY? Anyone over the age of 65 years who has life insurance whose circumstances have changed since the original policy was issued. Health Personal Financial >> PRODUCERS FINANCIAL PLANNERS ATTORNEYS ESTATE PLANNERS NON-PROFIT ORGANIZATIONS CHANGING CIRCUMSTANCES… Under-Performing Policies Estate Size Reduction Family Issues Divorce or Bankruptcy Deterioration of Health Retirement Sale of Business Death of Spouse Estate Tax Reform 1035 Exchange & LIFE SETTLEMENTS An Innovative Wealth Estate Planning Tool >> PRODUCERS FINANCIAL PLANNERS ATTORNEYS ESTATE PLANNERS NON-PROFIT ORGANIZATIONS RECENT LIFE SETTLEMENTS TWO TYPES OF PROSPECTS Those who no longer need insurance Those who are utilizing a Life Settlement to fund an alternative investment CASE HISTORY EXAMPLE 1 FEMALE – Age 72 $3,000,000.00 UL Policy • Small Cash Value • Under-Performing Policy LIFE SETTLEMENT SOLUTION Settlement Amount of $840,000.00 *Insured purchased an annuity with the proceeds 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 LAPSE EXAMPLE MALE – Age 69 $3,000,000 Term Policy • Client Was Going to Lapse • Divorce Decree LIFE SETTLEMENT SOLUTION Settlement Amount of $400,000.00 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 BUY/SELL EXAMPLE AGE 84 – Minor Health Issues $450,000 Policy • Premiums $32,000 • Buy/Sell Agreement • Partner Died LIFE SETTLEMENT SOLUTION Settlement Amount of $106,000.00 New BUSINESS Opportunities MULTIPLE COMMISSIONS FROM ONE STRATEGY 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 Commissions for referring other agents or agencies to Life Insurance Settlements Inc. 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: Completing the Settlement Process: 1. Collecting of policy and 1. Contracts are delivered to the medical information policy owner 2. Complete initial 2. Review, sign and return of underwriting of case settlement package 3. Send complete case to 3. Recorded changes by funding organizations insurance carrier 4. Negotiate and obtain 4. Escrow organization releases offers or declinations cash settlement to client 5. Communicate appraisal 5. Client rescission period value and compensation – Dependent on state 6. Referral source is compensated – Post rescission period Powerful New FINANCIAL PLANNING Tool… 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 Insurance Settlements, Inc. offer. Competitive bidding assures that you have found the highest offer. APPROACHING THE CLIENT Proactive Way to Speak Lower Premiums/Better Policy Better Interest Rate Manage Expectations of Client LIS IS A NETWORK OF FINANCIAL COMPANIES ADVISORS & AGENTS Combined Strengths Maximum Settlement Amounts Unparalleled Expertise Since 1994 Marketing & Advertisement Support Tools Education CORPORATE OFFICE : 550 WEST CYPRESS CREEK ROAD, SUITE 300 FORT LAUDERDALE, FL 33309 PROVIDER PARTNERSHIPS… Exclusive Funders Long-Term Relationships COMPLIMENTARY SERVICE Core Competencies Value Add Building A Significant Profit Center BENEFITS TO THE CLIENT… No Cost Liquidity Fund Alternative Product to Fit Current Needs Relief of Premium Expense Create a Better Solution for their Current Needs 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 & 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. 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 33309 TOLL 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: AK, CT, FL, NV, NY, OH, OR, UT, TX, VA, KS, MS, NM, & NC
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