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
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
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
