A Hidden Asset Comes to Life

1. A Hidden Asset Comes to Life Presented by: Jim Quance The Life Settlement Alliance Inc. 2/05

2. THE RIGHT FINANCIAL TOOL AT THE RIGHT TIME WHAT IS A LIFE SETTLEMENT? In its basic form, a life settlement is the transfer of a life insurance policy holder to a third party that promises to make all future payments in order to keep the policy active.

3. POTENTIAL APPLICATIONS: Changes in an insured’s financial condition where he or she can longer afford to pay the premiums on the policy. When LTC or retirement income takes precedence over life insurance death proceeds. Individuals that want to convert future life insurance DBs for current assets and uses such as gifts, charities, or investments. Policies insuring buy-sell agreements when the owner survives or when a firm is purchased by a third party. Unneeded group or supplemental term insurance after an individual retires. Business owned policies on the previous owner when the business is sold. Charities that own a donated policy where they don’t want to pay premiums. 1035 Exchange

4. & LIFE SETTLEMENTS An Innovative Wealth Estate Planning Tool

5. PARAMETERS OF A LIFE SETTLEMENT How much will be received for a policy? There are many factors that determine the offer amounts: Age Premiums Client’s Health Type of Policy Insurance Company Rating Policy Size Competitive Bidding State of Residency GENERAL RULE:Age, health and future premiums are the primary factors that determine the amount of the Life Settlement offer. Competitive bidding assures that you have found the highest offer.

6. CASE HISTORY EXAMPLE 2 • MALE – Age 65 • $4,000,000.00 UL Policy • Cash Value $90,000.00 • Retiring Executive LIFE SETTLEMENT SOLUTION Settlement Amount of $525,000.00 *Received $435,000 over surrender

7. SURRENDER EXAMPLE • MALE – Age 69 • $3,000,000 Term Policy • Surrender Value $0 • Client Was Going to Surrender • Divorce Decree LIFE SETTLEMENT SOLUTION Settlement Amount of $400,000.00

8. NEW PRODUCT EXAMPLE • MALE – Age 77 • 7 UL Policies Totaling $13 Million • Premiums $400,000 • Surrender Value $1.8 Million LIFE SETTLEMENT SOLUTION Settlement Amount of $2,562,336.00 *Agent sold client $27mil of current generation UL and VUL policies

9. SURRENDER EXAMPLE • MALE – Age 68 • $750,000.00 Term Policy • Surrender Value $0 • Client was going to surrender LIFE SETTLEMENT SOLUTION Settlement Amount of $120,000.00

10. BUY/SELL EXAMPLE • AGE 84 – Minor Health Issues • $450,000 Policy • Premiums $32,000 • Buy/Sell Agreement • Partner Died • Deceased Partners • Daughter Has Policy Rights LIFE SETTLEMENT SOLUTION Settlement Amount of $106,000.00

11. APPROACHING THE CLIENT Proactive Way to Speak Lower Premiums/Better Policy Better Interest Rate Manage Expectations of Client

12. BENEFIT TO THE CLIENT… Pay off debt Fund charitable gift Cash for a higher quality of life Create funds to invest elsewhere Cash to fund more cost effective coverage Alternative to surrendering or lapsing a policy

13. PRODUCERS OPTIONS… Clients who qualify for life settlements can see what the highest purchase offer is. If they choose to accept the payment, they have added bottom-line dollars to their asset base. Those who don't qualify, they will find out the total liquidation value of that asset. Therefore they will be able to properly re-calculate their net worth and know their true financial picture.

14. BENEFITS FOR THE FINANCIAL PROFESSIONAL • Referral fee from the life settlement transaction • Trailer commission on policy for agent of record • Investment or annuity commissions from the capital created from the life settlement transaction • Commission on new life insurance products that better suits your clients current needs • Commission on the conversion if the policy being considered is a term product

15. Various marketing collateral is available for the agents to use. Registered agents can gain access to the following: Hi-res Advertising PDF files for print, web or direct mail Qualifying Tri-fold Brochures PowerPoint Presentations to increase sales presentation Custom designs can also be created for top producers. MARKETING/ADVERTISING COLLATERAL custom tri-folds Print ready advertisements Mail stuffer

16. FRONT & BACK-END OF A LIFE SETTLEMENT FRONT-END: If a policy owner sells a policy to a licensed settlement provider and the transaction has been consummated in accordance with the state’s viatical and life settlement laws and regulations (front-end), the client and his insurance advisor have not participated in a transaction regulated as a security. But most companies will consider VUL policies as securities Because of being interest sensitive. BACK-END: If an insurance advisor is raising funds for financing entities or reselling purchased policies to individual investors (back-end) this, according to most states, would constitute a security.

17. DOES MY STATE REGULATE VIATICAL AND/OR LIFE SETTLEMENTS? Viatical/Life Settlements are regulated by state Insurance Departments. Some states have enacted statutes addressing the sale of life insurance policies insuring non-terminally or chronically ill individuals and some only laws that only regulate the sale of life insurance policies insuring terminally or chronically ill individuals and others do not regulate the transaction at all. Of those states that regulate the transaction, most require both the Viatical/Life Settlement Broker (facilitator of the transaction) and Viatical/Life Settlement Provider (purchaser of the policy) to be licensed.

18. LSA IS LICENSED IN THE FOLLOWING STATES… Delaware Indiana Maryland Massachusetts Nevada New Jersey Oregon Pennsylvania Virginia Washington Alaska Louisiana Texas Arkansas Tennessee Connecticut Utah Florida Wisconsin Kentucky Maine Minnesota Montana Nebraska North Dakota Ohio

19. EASY STEPS TO QUALIFY A CASE • Evaluate existing book of business - clients over 70 years or any clients living with a serious illness • Recognize changing needs or circumstances of your clients. • Call toll free 1.800.871.9440 or visit www.lsalliance.comfor a FREE non-binding appraisal of the policy • Approach client with proposal to sell their policy and purchase a product that better suits their needs • Client completes the application • LSA will provide underwriting services • LSA will negotiate and obtain offers or declinations • Total processing time is 4-6 weeks.

20. SETTLEMENT TIMELINE Upon Receiving the Following: Complete application & sign authorization Copy of photo identification Copy of policy, if obtainable Appraisal Process Consist of: Collecting of policy and medical information Complete initial underwriting of case Send complete case to funding organizations Negotiate and obtain offers or declinations Communicate appraisal value and compensation Completing the Settlement Process: Contracts are delivered to the policy owner Review, sign and return of settlement package Recorded changes by insurance carrier Escrow organization releases cash settlement to client Client rescission period– Dependent on state Referral source is compensated– Post rescission period

21. The Life Settlement Alliance Inc. is a network of financial companies, advisors and agents whose combined efforts and strengths are used as leverage in the life settlement market. • The knowledgeable staff at the Alliance, utilizing their expertise in the industry, have facilitated the sale of life policies since 1994. • We offer a very attractive referral and incentive program. In addition, we provide marketing, advertising, and compliance support for our network of national insurance agents, producers and financial professionals. • For more information on LSA, contact Jim Quance at 1.800.871.9440 x 308 or quance@lsalliance.com

22. 200 East Broward Blvd., Suite 1135 • Fort Lauderdale, FL 33301