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Unlock hidden value in life insurance policies by xiuliliaofz


									Life Settlements
  Anthony Ridd
  Director of Life Settlements
  LifeStyle Insurance Services
    What is a Life Insurance

   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
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
   Insurance no longer needed
       Estate tax change
       Family issues
       Premium too expensive
       Suitability
       Buy/Sell Agreement
       Retirement and Key Man
       For Long Term Care or other health needs
       Replacement of an existing policy with a new
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
    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
   Male age 82
   Universal Life
   Face Amount: $1,000,000
   Cash Value: $112,000
   Offer: $257,000
    Reason for Sale: The premium for the insured’s life insurance
    policy were expensive and becoming difficult to afford. In
    addition, the insured experienced a substantial reduction in estate
    value and no longer needed as much life insurance to pay estate
    taxes. He was able to sell his life insurance policy for twice the
    Cash Surrender Value.
Agent compensation: $30,000 on settlement
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
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       $140,000

            Taxed as
            Ordinary Income       $10,000           Cash
           Taxed Basis                              Value (basis
           (Premiums Paid)                          & earnings)
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.

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