CHECK SHEET ✓ LCX Life is a turn-key life settlement back office for BGA’s and agents. Agents do not need to obtain medical records or life expectancy reports, and simply refer an eligible policy owner and then let LCX do all the work on their behalf. The Policy Review process will determine if a policy has potential life settlement value, and if so, what is needed for medical underwriting if necessary. ➢ Step One –Information: Submit policy owner information and a current, in-force illustration. ➢ Step Two– Analysis: Policy owner information is reviewed for age, gender, state of residence, and prevailing health impairments impacting remaining life expectancy (the typical qualifying range is 2-10 years). ➢ Step Three – Results: Longevity/Settlement experts present a policy valuation analysis detailing what the owner could expect to receive as a percentage of the death benefit as a purchase price for their policy. The typical time it takes from opening the case to finalizing the purchase and sale of the policy is 60-90 days. ✓ LCX Life is a no-load life settlement, with the total amount going to the policy owner because there are no thirdparty settlement brokerage fees coming off the top of the offer. Agents appointed by LCX Life do not broker a life settlement, and do not negotiate the value of a life settlement transaction between the policy owner and a buyer. Agents refer leads to LCX Life and are paid a referral fee as a fixed percentage of a policy’s face value, which is not a brokerage commission being taken out of the settlement offer before it gets to the policy owner. By eliminating the need for a life settlement broker, all of the hassle and delay is removed from the transaction, and without a brokerage commission coming out of the offer, as much as 30% of the value for the policy is preserved for the policy owner. Agents know from the start the amount that their referral fee will be because it is a fixed percentage based on the death benefit and not the offer to the policy owner. ✓ Agents and advisors appointed with LCX Life are not required to hold a life settlement broker’s license or even an insurance license. Because agents and advisors appointed by LCX Life limit their activities to educating and referring policy owners for a potential life settlement, and they do not negotiate a life settlement and do not take a commission out of the settlement offer to the policy owner, they are considered lead generators and do not need to hold special licenses or obtain their own E&O, complete CE’s, or work through life settlement brokers. ✓ Agents and advisors co-brokering a life settlement with a settlement broker is responsible for getting their own E&O coverage (which can be expensive), and they must have a specific life settlement broker’s license in any of the 45 regulated states where the policy is domiciled. It is a regulatory requirement for anyone co-brokering a life settlement (defined as negotiating terms on behalf of the policy owner and receiving payment in the form of a percentage of the gross settlement offer) to possess a life insurance license, a life settlement brokerage license, and coverage with an errors and omissions (E&O) policy. ✓ Life Settlements are a well-regulated, mainstream financial option for seniors-- 45 states have implemented NAIC model life settlement regulations covering 90% of the U.S. population. Over the last two decades, life settlement regulations have been put in place covering areas such as producer licensing (to “broker or co-broker” a life settlement by working with a life settlement broker you must hold a specific settlement brokerage license), compensation disclosure and other consumer protections. Michigan and New Mexico regulate viatical settlements only, while Alabama, Missouri, South Carolina, South Dakota, Wyoming, and Washington, D.C have no specific life settlement regulations currently in place.
✓ There are a number of different life settlement options for a policy owner to consider the best solution to address their financial goals. Each option is designed to provide the maximum value for the policy and provide the best financial vehicle to address the unique financial and healthcare needs for the policy owner: ➢ ➢ ➢ ➢ ➢
Traditional Life Settlement LTC Settlement (Tax-Free LTC-HSA Benefit Plan) Speed Settlement (non-underwritten for $1M+ and mid-70’s+) Whole Life Reverse Settlement (non-underwritten- younger and healthier the better) Viatical Settlement (2 ADL’s or more / under 2 years of remaining life expectancy)
✓ Life Settlements are an age and health driven financial option that primarily benefits seniors. In fact, think of the process as “Reverse Underwriting” where the older and sicker the insured is, the better they will do with a life settlement. The minimum age is 65, with the ideal age range being between 75 and 92. Also, this is for people with impaired, chronic or even terminal health diagnosis. Life settlements are for people with a measurable life expectancy range of 2-10 years. Any form of life insurance will qualify, with Universal, Term and Whole life the most common forms of insurance for life settlements. The minimum death benefit to make a life settlement work is $100,000 for any one policy to be considered. ✓ Life insurance policy is legally recognized as an asset of the policy owner. This means the owner has the same personal property rights as the owner of a home. Seniors on an annual basis own over $200B worth of life insurance policy death benefits that could potentially qualify for a life settlement The danger for these seniors is that 9 out of 10 polices are in danger of being lapsed or surrendered before ever paying out a death benefit. It’s important for life insurance policy owners to understand that their policy may have considerable life settlement value before it would needlessly be lapsed or surrendered. ✓ All forms of life insurance will qualify for a life settlement, but not every policy will work. As a general guideline, Universal Life policies and convertible Term Life policies are the two most common types that will qualify for a traditional settlement. Term policies past their convertibility period are possible, but the insured’s remaining life expectancy would have to be very short. Whole Life policies are eligible for a Reverse Settlement based on the Cash Surrender Value instead of the death benefit. Variable life can qualify, but because they are regulated as securities, they are very complex transactions. A second-to-die policy could work usually after the first insured has passed away. Overall, policies that were originally issued as standard or preferred, and with a premium to death benefit ratio under 6% will most likely price for life settlement value. ✓ Funds from a life settlement can be tax-free. If the policy owner is diagnosed with chronic health conditions (2 ADL’s or more) or terminal conditions (2 years or less of life expectancy), the funds received from the settlement of their policy are HIPAA exempt from Federal taxes. Also, any funds received at or below the basis that the policy owner has in their policy is exempt from taxation. Basis in a policy is the equivalent of how much in premium payments have been made over the life of the policy. Anything received above basis in the policy that does not meet the HIPAA exemption, is taxed as capital gain. This information is intended to be a guideline and not tax advice which should always be sought from a certified tax advisor. ✓ The hottest insurance and annuity products sold today offer living benefit riders and conversion options to address financial challenges related to critical illness and long-term care. People understand the value of maintaining death benefit protection for their families while they are young and healthy, but then later having the flexibility to switch from a death benefit to a lump sum or living benefit to address the challenges of aging. LCX Life provides “aftermarket” options to exchange a death benefit for living benefits for policies originally sold without those options to
address health and long-term care expenses. Now seniors can elect to settle a policy at absolutely no cost for a lump sum and living benefit options to address their financial and healthcare needs-- with no more premium payments. ✓ Government leaders support life settlements as a way to pay for long-term care? A watershed event for the life insurance industry, and people in need of long-term care occurred when the National Association of Insurance Commissioners released their policy paper endorsing life settlements as a viable option to help people pay for longterm care. Soon after, Congress followed up by introducing a bill for a new law to create a LTC-Senior Health Planning Account funded exclusively with tax-free dollars from a life settlement to pay for long-term care in a Benefit Account very similar to a tax-free health savings account or HSA.
LCX Life: LCX Life is the only Life Settlement Marketing Organization (LSMO) in the insurance industry. Our mission is to work with agents, advisors, and our IMO/BGA partners to build a network of Appointed Referral Agents who are educated and supported to offer the life settlement option to policy owners contemplating lapse or surrender. We also work with independent agents, financial advisors, lawyers, accountants, and long-term care industry service providers. With LCX Life, we can rescue thousands of policies every year, and in the process, deliver a recurring revenue stream to your organization. www.lcxlife.com Chris Orestis, President of LCX Life, is a nationally recognized senior care advocate and expert in retirement, long-term care and specialty senior living funding solutions. The author of two books, numerous published papers and articles, and a frequent industry speaker; he is the innovator that brought the LTC-Life Settlement into the market over a decade ago.