*These case studies are for illustrative purposes only and do not represent specific life settlement cases in either the past or present.

Case Study 1: The policy is no longer needed*

Problem:

• Bob, age 71, had a $2 million life insurance policy purchased for estate planning purposes with no cash value
• Recent reduction in estate tax liability combined with effective gifting strategies rendered the policy unnecessary
• Although the client’s wife is healthy, they were concerned about her care if she was widowed

Solution:

• $2 million policy was purchased for $720,000
• The Financial Planner proposed a Long-Term Care policy for the client’s wife and proposed an immediate Annuity as a funding vehicle
• Bob utilized settlement monies to fund the Long-Term Care and Annuity combination as well as continue his gifting strategies

Result:

• Bob was thrilled at the opportunity to “find a market” for his life insurance policy, which provided more than enough capital to fund other insurance needs
• Financial Planner was able to uncover and address two needs, and through the settlement was able to generate the funds to put the plans in place
• Plan was put in place with no cost to the client while alleviating the client of an annual premium that was about to increase

*These case studies are for illustrative purposes only and do not represent specific life settlement cases in either the past or present.

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Problem:

• Brian, age 76, has $10 million in total coverage
• Estate has grown to where the client has a $20 million estate tax problem
• Brian had two problems
  • he has become uninsurable, but younger wife is in good health
  • he does not want to pay additional premiums

Solution:

• $10 million policy was purchased for $2.5 million
• Estate Planner proposed $20 million survivorship policy
• Brian used $2.5 million to purchase a single-premium, minimum-deposit $20 million survivorship policy

Result:

• Leveraged current coverage to fix client’s problem with no money out of pocket
• Doubled the client’s coverage
• Everybody is happy

*These case studies are for illustrative purposes only and do not represent specific life settlement cases in either the past or present.

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Problem:

• The Fix It Company purchased a $3 million life insurance policy to fund deferred compensation plan for a key executive (cash value is $150,000)
• Executive has taken early retirement due to declining health
• Executive is partially vested in deferred compensation plan

Solution:

• $3 million policy was purchased for $600,000
• $600,000 settlement enabled Fix It to recover its original cost, as well as provide a present value lump-sum payout to the retired executive

Result:

• The Fix It Company was able to quadruple the value of an asset that no longer had business value
• Funds are now available that were previously earmarked to pay premiums
• Business owner, impressed with the Producer for developing such an innovative solution, personally recommended him to other local business owners

*These case studies are for illustrative purposes only and do not represent specific life settlement cases in either the past or present.

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Problem:

• Charlie, a business owner, age 64, had $3.5 million in Key Person life insurance
• Policy performance had deteriorated rapidly, there was little cash value, and premium payments were about to escalate significantly
• He was in the process of letting the contract lapse through nonpayment of premiums

Solution:

• $3.5 million policy was purchased for $500,000
• Charlie felt he had received $500,000 for nothing, since he had “written that policy off”
• Settlement monies were used to clear open debt for the business, and the owner installed an Executive Bonus plan to enable him to personally purchase a Survivorship policy on the Producer’s advice

Result:

• Charlie was able to turn what he perceived to be a useless asset into $500,000
• Settlement funds not only helped the business but also addressed the personal insurance needs of the business owner
• Life Insurance maintained its recognition as legitimate planning tool

*These case studies are for illustrative purposes only and do not represent specific life settlement cases in either the past or present.

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Problem:

• Steven, a business owner, age 75, has $20 million for stock redemption purposes
• Heart condition triggers sale of business
• Buyer’s offer price does not meet seller’s target price
• New owners have no need for the policy

Solution:

• Policy has $1.5 million cash surrender value
• Life settlement was offered for $6 million
• Purchase premium of $4.5 million over cash value was factored into the sale of the insured’s interest in the business

Result:

• Steven was able to facilitate the sale of the business and get “his price”
• Settlement funds were used to create trusts for owner's grandchildren

*These case studies are for illustrative purposes only and do not represent specific life settlement cases in either the past or present.

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