Case Histories

Client Scenario: Charitable Gifting
Policy Type: Universal Life
Insured: Male, Age 75
Face Amount: $2.0 million
Cash Surrender Value: $55,000
Sale Value: $425,000

This client had a long standing relationship with a children's charity that has experienced declining donations and a reduced foundation value as a result of the financial crisis. The client no longer needs this life insurance policy that was purchased to fund projected estate tax liabilities that have decreased significantly. The charity needs capital currently and neither the client nor the charity desire the ongoing administrative and premium gifting/funding requirements of establishing any type of charitable trust. As a result, the client decided to transact a life settlement which garnered $425,000. The client reserved a portion of the proceeds to pay taxes and other urgent expenses and then donated $250,000 to the charity. The client immediately sees the benefit of his gift, realizes a charitable tax deduction and the charity receives a much needed capital injection.

Client Scenario: Buy-Sell Exit Strategy
Policy Type: Two Universal Life Policies
Insureds: Male, Age 75 and Male Age 72
Face Amounts: $5 million for each policy
Cash Surrender Value: $175,000 and $155,000
Sale Values: $1,100,000 and $875,000

Two senior partners in a law practice enacted a buy-sell agreement 15 years ago when they formed the partnership. One of the partners is retiring and the remaining partners are purchasing his ownership interest in the firm. The partnership no longer needs the insurance policies within the buy-sell agreement and decide to transact life settlements on the two policies and split the proceeds.

Policy Type: Term
Insured: Male, Age 72
Face Amount: $1.25 Million
Cash Value: $0
Sale Value: $325,000

72-year old male presented a $1,250,000 10-year Term policy with NO CASH VALUE in it's 8th policy year.

The insured has been battling some health conditions and needs to find liquidity. Recent market conditions have reduced the value of the estate, reducing the need for life insurance to pay estate taxes and making the life insurance policy the perfect disposable asset.

This asset was sold for $325,000.

If this policy had not been submitted for review, it would have expired, leaving the insured with $0.

Policy Type: Term
Insured: Male, Age 75
Face Amount: $11 Million
Cash Value: $0
Sale Value: $2.75 Million

As part of his retirement package, a retiring CEO received an $11 million term policy from his company. His financial planner advised him he could assume the premiums, lapse the policy or consider a life settlement. As the client had no desire to maintain the ongoing premiums he chose a life settlement for $2.75 million. This enabled him to reach his goal of establishing a trust for his grandchildren.

Policy Type: Universal Life
Insured: Female, age 87
Face Amount: $6.5 Million
Cash Value: $705,000
Sale Value: $2.4 Million

The client was still paying premiums in the tenth year of her seven-year vanishing premium policy. She was extremely dissatisfied with the policy performance, but still needed life insurance for estate planning purposes.

Her attorney recommended the policy be appraised to determine its market value. The policy was valued at more than three times the cash value. The agent, who had originally sold her the policy, was able to use the proceeds to provide a better performing policy and re-establish his overall relationship with the client.

Policy Type: Survivorship (Joint Life)
Insured: Male, Age 76 / Female, (Deceased)
Face Amount: $1.25 Million
Cash Value: $32,000
Sale Value: $375,000

The family could not afford to keep paying the premiums for their parents' policy that was held inside an Irrevocable Life Insurance Trust. After the mother passed away, their advisor arranged for a policy appraisal and learned the value is $375,000. The estate then purchased a smaller, more efficient term life policy for the father and still made a profit on the life settlement.

Policy Type: Variable Life
Insured: Male, Age 70
Death Pay-Out: $4.5 Million
Value if Surrendered: $232,000
Sale Value: $950,000

This gentleman was diagnosed with coronary artery disease and needed to re-value his financial situation. The minimum cost for him to keep this policy had increased as the policy lost much of its value. His son arranged for a policy appraisal and the policy was sold for $950,000. He was able to recover all of the premiums he had paid over the years, plus a nice profit that would have been lost had he simply surrendered the policy back to the insurance company.

Policy Type: Term
Insured: Female, Age 79
Face Amount: $3 Million
Cash Value: $0
Sale Value: $870,000

This ailing grandmother's 10-yearterm policy was going to expire because she could not afford to convert it. Letting the policy lapse would leave her with $0. She received numerous offers for her policy, settling on $870,000.

Female, age 72.  California resident.  $3M universal life policy.  Under performing policy due to reductions in crediting rate.  Negligible cash surrender value in policy.  Resulting in a settlement amount of $870,000.  Insured used the money to purchase annuity.

Gentleman, male, age 70.  $4M universal life policy, cash surrender value $90,000.  Retired from his corporation, policy being rolled out to him at retirement. Client receives a settlement proceed in the amount of $525,000.  Representing a $435,000 gain over his cash surrender value.

Male, age 71, $3M term policy.  Policy is going to lapse.  Was in its last year of convertibility.  Divorce decree required that the policy be maintained.  Rather than sell the policy to the wife, a life settlement proceeds of $400,000 was used to pay off the balance of alimony support to the former spouse.

Gentleman age 77. Six policies totaling $15M and an obligation to pay almost $400,000 of premiums.  Policies cash surrender value of approximately $2M, and the policies were sold in the free market for over $3.5M.