Q1 - Vol. 3, No. 2, February 2006      Life Settlement News

 

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Introducing the Premium Optimization Plan (tm)

As an industry leader in optimizing the value of life insurance policies on the secondary market, Advanced Settlements, Inc. is pleased to offer the “next generation” of insurance products -- the Premium Optimization PlanÔ (POP).  POP is an innovative premium financing solution for affluent seniors who want to maximize their insurability capacity with minimal capital outlay.

POP gives the producer or financial professional a variety of options to achieve the client’s wealth maximization strategy, depending upon the senior’s age, health status, and financial objectives.  Our POP program offers third-party financing for policies as little as $3 million, to as high as $50 million of excess insurability capacity. 

Premium financing is a funding strategy for affluent seniors that enables them to finance their insurance premiums with-out any major capital investment or personal collateral required.  Our POP features a variety of premium financing options that include both short-term financing (non-recourse) and longer term residual benefit programs (annuity arbitrage). 

The primary advantage for seniors choosing our  non-recourse premium financing program is the fact that they have a choice at the end of the financing period.  That choice includes:

  • Keeping the policy, which involves assuming premium payments and repaying the original loan, interest and fees.

  • Selling the policy through a life settlement broker on the secondary life insurance market, and using a portion of the proceeds from the sale to satisfy the financing obligation.

  • Walking away from the policy without obligation, and with “no recourse” to the lender.

What are the Advantages to the senior client?

  • Allows the insured to retain their own capital, which remains invested for maximum returns in today’s growing markets.

  • The senior can insure themselves with multimillion dollar life insurance policies from the nation’s top-rated carriers without the associated premium costs.

  • Allows the senior to “test-drive” their excess insurability capacity and postpone making final decisions regarding their need for life insurance.

  •  No Recourse:  This means that the insured senior can exercise the “Non-Recourse” clause of the contract and walk away from the program.

Should the insured die within the two-year period, the beneficiary receives the death benefit, less set-up fees and reimbursed loan payments and interest.

Who qualifies for premium financing?

 The following are the eligibility criteria for POP:

  • Seniors between the ages of 73 and 89.

  • $5 million net worth and up, which may include assets such as real estate, investment portfolio, retirement savings, etc.

  • $3 mil. to $50 mil. of excess life insurance capacity.

  • Willingness to convert their excess insurability capacity to enter the program.

How the agent benefits by using Advanced Settlements

We are often told by agents and financial advisors that  the complexity of structuring premium financing transactions can be a daunting task.  Therefore, we have taken a unique approach to the process by minimizing the agent’s responsibilities while maximizing the multiple solutions available to the senior client.  The value-added we bring helps the agent customize a solution for their senior client with minimal effort on their part.

One source – one point of contact.  We simplify a complex process so agents can focus on what they do best – selling insurance and spending time with clients.

Turn-key back office support means agents do not have to hire underwriting or support staff to process transactions.

We purchase two life expectancy certificates for each client.  The agent is not charged for this service.

Our volume creates leverage with financing entities for both premium financing programs and life settlement transactions.

Consultative Selling – Collaboration:  We spend time educating the agent on the various premium financing options so they can be effective in selling the best solution that meets their client’s objectives.

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