Melville Capital

88% of Universal Life and 99% of Term Policies do not result in a payout of the Death Benefit.* This occurs because most policy owners decide they don't want, don't need or can't afford their policy. Let us help you get on the right side of that equation.

Case Studies

Personal Needs

Female, Age 81 $1,400,000 UL Policy (CSV = $46,000)
  • Husband passed away
  • Children grown and successful
  • Feels policy is excessive
  • Wants monthly income stream
Life Settlement Solution
  • Settlement Amount of $327,000
  • Proceeds invested into immediate Annuity
  • Received $281,000 over surrender

Estate Planning

Male, Age 77 & Female, Age 76 $5,000,000 Survivorship UL
  • Policy underperforming
  • Updated planning, only need $2MM
  • $285,000 CSV
  • If 1035, projected premiums = $84,000/yr
Life Settlement Solution
  • Net offer = $700,000
  • Use as lump sum dump, new policy
  • Projected annual premiums = $53,000
  • $31,000/yr savings

Corporate Bankruptcy & Term Conversion

Male, Age 73 $15,000,000 Term Policy (Policy was in 30-day Grace Period)
  • Bankruptcy of Home Goods Merchant
  • Policy Insuring Company Founder
  • Failed Private Equity Acquisition
  • Senior Creditor Trying to Recover Portion of Exposure
Life Settlement Solution
  • Identified Significant Market Value
  • Policy Immediately Brought Back In-Force *
  • BK court permission
  • Policy converted to UL from TERM
  • Settlement Amount of ~$2,700,000 roughly equal to entire BK claim of Sr. Lender

Philanthropic

Male, Age 76 $2,00,000 UL Policy Cost basis = $300,000 CSV = $39,000
  • No longer needs policy
  • Desires to be more supportive of charity
  • Could donate to charity for deduction of CSV and make premiums each year as additional contribution to receive deductions
Life Settlement Solution
  • Set up CRT
  • Obtain appraisal of policy in the secondary market = $540,000
  • Donate policy to CRT and settle policy
  • Get deduction based on the $540,000
  • Receive annual income stream from proceeds

Chapter 11 Bankruptcy

Two Insureds - Mid 70's $8,000,000 Universal Life (Surrender Charges Netted CSV to Zero)
  • Bankruptcy of Family Owned Diamond Distributor & Retailer
  • Policies Insured Company Owners
  • Policies left to lapse given no CSV
Life Settlement Solution
  • Based on policy type and age of insured, policies had significant Market Value
  • BK Judge Excluded Policy from 363 Sale
  • Settlement Offer of > $1,300,000

Note: > $26MM in additional policies were surrendered one year earlier because unaware of LS option

Buy/Sell Example

Male, Age 79 $1,400,000 Policy ($104,000 CSV)
  • Buy/Sell Agreement
  • Insured Senior Partner of Large Medical Practice
  • Aggressive Office/Equipment Expansion Over Levered Business ⇒ loan defaults
Life Settlement Solution
  • Settlement amount of $545,000 vs. $104,000 CSV
  • Proceeds used to reduce leverage
  • Received $441,000 over surrender

Out-of-Court Restructure

CEO, Age 75 $2,300,000 UL Policy ($25,000 CSV)
  • Struggling Manufacturer of Bridge Repair Systems
  • Low Cash Value – Company Could No Longer Afford Premiums
  • Company Underperforming and in Turnaround
  • Planning to surrender Policy For $25,000
Life Settlement Solution
  • Settlement Amount of $280,000 vs $25,000 CSV
  • Lenders Allowed for Payment of Critical Vendors
  • Proceeds Helped Fund Company Through Sales Recovery
  • > $7MM EBITDA Today

Out-of-Court Restructure

Male, Age 69 $3,000,000 UL Policy ($117,000 CSV) $3,000,000 Term Policy
  • Insured Founder & CEO
  • Company endured 18 months of significant EBITDA decline
  • Company hired crisis consultant who determined sale best option
Life Settlement Solution
  • Settlement amount of $936,000
  • Cash provided critical liquidity for company until sale complete
  • Received $819,000 over surrender

Disclaimer

Life Settlement amounts are based on numerous factors. The case examples are for illustration purposes and does not represent future 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. Melville Capital is a licensed broker or producer.

Melville Capital © 2009 All rights reserved. info@melvillecapital.com * American Council of Life Insurers