Taking Full Advantage of a Developing Market
The Life Settlements market developed, like any other market, because there was a need and an opportunity. There was a need by those who no longer could afford their policies or who no longer required life insurance. Large and sophisticated institutional funds were created to fulfill that need. Investment firms that formed these funds saw this as an opportunity to create a new portfolio of assets (the policies) with a predictable investment stream.

What is our role as the buyer?
In the secondary market, the investment funds bid for the rights to you or your client’s policy – that is, they will place a value on the policy by looking at these factors:
The death benefit – or the face value of the policy.
Client age and health.
Cash value of the policy.
Premiums required by the policy.

As the Buyer, we bid for the right to the death benefit. If we purchase the policy, we also assume the obligations of paying the premiums. We will make sure that you or your client receives the highest value for their policy via competitive bidding.

What are the tax implications* of a Life Settlement transaction?
Non-taxable up to you or your client’s basis (such as premiums paid)
Taxable at ordinary rates beyond you or your client’s basis up to the cash surrender value.
Taxable as capital gains beyond the cash surrender value.

* We do not give tax advice and recommend that you consult your tax specialist for this information. Check with a qualified tax advisor as to how this relates to you or your client; or we will refer one to you as part of a comprehensive due diligence. Contact us today for more information.