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

Cash Settlement:
$1,104,000
(268% of CSV)
(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

Cash Settlement:
$64,400
(13% of DB)
(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.