Veris Case Studies
Case Profile:
Son owned a universal life policy on 79 year-old mother who was in an assisted living facility. He needed to supplement her cost of care and was struggling to make premium payments.
Before Settlement:
| Death Benefit: | $250,000 | |
| Annual Premium: | $10,844 | |
| CashSurrender Value (CSV): | $0 |
Cash Settlement:
| $80,000 | ||
| (32% of DB) |
Benefits
from life settlement:
Son was able to use $80,000 to help maintain his mother’s quality of care.
Case Profile:
Male age 71. Trust maintained $8M policy for estate planning purposes. Due to erosion of estate value, $8M in coverage was no longer needed or affordable. Instead of simply executing a traditional 1035 tax-free exchange of current account values into new $4M policy, policy was able to be settled and additional after-tax proceeds were used to more cost effectively purchase the more suitable policy.
Before Settlement:
| Death Benefit: | $8,000,000 | |
| Cash Surrender Value: | $412,000 | |
| CashSurrender Value (CSV): | $0 | |
| Basis (Premiums paid to date) | $941,500 |
| $1,104,000 | ||
| (268% of CSV) | ||
Cash Settlement:
(applied to replacement policy)Benefits
from Life Settlement:
Was able to use settlement proceeds to purchase new $4M policy. This resulted in having lower premiums then would have been possible through a traditional 1035 tax-free exchange of the existing policies account value.
Case Profile:
Male age 68 is a retiring business executive. Company maintained key person Term life policy that is no longer needed and allows executive to assume ownership but he does not need the coverage.
Before Settlement:
| Death Benefit: | $500,000 | |
| Cash Surrender Value: | $0 | |
| Policy Converted to Universal Life | ||
| Conversion Premium | $10,870 |
| $64,400 | ||
| (13% of DB) | ||
Cash Settlement:
(plus reimbursed $10,870 for premium outlay to convert policy) Benefits
of settlement:
Retiring executive was able to turn an unneeded, and presumed worthless policy, into a $64K supplement to his retirement.
Case Profile:
District of Columbia based university owned a $500,000 universal life policy that was donated several years ago by alumnus who is now 82 . Due to ongoing premium requirements and desire to fund a current gift, they decided to explore a life settlement.
Before Settlement:
| Death Benefit: | $500,000 | |
| Cash Surrender Value: | $79,000 |
Cash Settlement:
| $210,000 | ||
| (266% of CSV and 42% of DB) | ||
Benefits of settlement:
University was able to increase proceeds from policy by $131,000.
Disclaimer: Examples based upon files underwritten by Veris Settlement Partners, Inc. and are solely intended to demonstrate the potential benefits of a life settlement transaction and should not be relied upon as an indicator of the purchase price that will be paid for a life insurance policy.
