Memorandum. Arbitrage as applied to the Life Insurance and Life Settlements Markets

Transcription

1 Memorandum Arbitrage as applied to the Life Insurance and Life Settlements Markets Definition Arbitrage [Encarta World English Dictionary] - the simultaneous buying and selling of the same negotiables or commodities in different markets in order to make an immediate riskless profit. Arbitrage Strategy Our clients are often high net worth individuals over the age of 70 with sufficient amounts of life insurance. While they may need the insurance to satisfy estate planning requirements, for example, they do not necessarily need more money. They can very well afford the life insurance premiums. Nevertheless, they have successfully applied the concept of Arbitrage in the life insurance market, in which the policy itself is the negotiable referred to above. Two separate markets drive this Arbitrage Strategy. One, the primary life insurance market, consisting of competitive insurance carriers bidding to supply policies to insurable individuals at lower premiums. Two, the Life Settlements secondary market consisting of increasingly competitive buyers (investment funds) bidding to purchase existing policies, driving values upward. It is possible for the client to purchase a new policy on similar terms to his existing policy and to then sell the existing policy in the secondary market. The client is thus able to capture the value or profit that is created between the two separate markets. This does not apply to everyone; the client must be insurable on the one hand, but must also fit within the medical parameters in the Life Settlements market, on the other. Most importantly, however, is that there is no risk to ascertain whether this strategy is applicable.* Principals successfully engage strategy real world example The principals of Integrity Life Settlements, LLC successfully applied the Arbitrage Strategy to their own family policies in three separate instances. (This, in fact, is what encouraged them to enter the field of Life Settlements in the first place.) The principals are willing to reveal the legal documents surrounding their own personal Life Settlements transactions. In one case, the family trust owned a $4.6 million dollar survivorship policy on the lives of the 82 year old patriarch and his 77 year wife (the Grantors). Because of the size of the estate, continued insurance coverage was preferred. The Grantors were insurable and they were able to secure a new policy for approximately twenty Memorandum: Arbitrage August, 2007 Integrity Life Settlements, LLC Page 1

2 thousand dollars in higher annual premiums (from $100,000 per annum up to $120,000 per annum). Serious bidding for the existing policy started in the area of $600,000 and quickly rose to $800,000. The Trust ultimately was able to sell the existing policy for a net value in excess of $1.5 million, although it should be stated that part of this value was due in part to a change in health of the wife during the negotiation process. Notwithstanding this change in health, the transaction would have been very lucrative to the Trust and Grantors family even at the level of $900,000 (which had been offered prior to any serious health changes.) Another Perspective Possible Reasons for Occurrence The Arbitrage as applied to life insurance may also be simply described as two opposing bets being made by each of the separate markets: Primary Market: made up of life insurance companies, the names with which you are probably quite familiar. When these companies sell life insurance, they are betting on the likelihood that: 1. the insured will either live a long time, and that the Carrier will collect many years of premiums; or that 2. the policy will some day be lapsed prior to the Carrier being obligated to pay a death claim. Secondary Market: made up of Providers that represent institutional funds from investment banks and commercial banks (the names with which you are probably quite familiar) as well as many hedge funds and retirement funds, for example, which may be unknown to you. When these companies purchase life policies they are betting on the likelihood that: 1. while there is not an imminent threat of the insured s passing, his life expectancy is shorter than estimates assumed by the Carrier. It is uncertain as to why an Arbitrage scenario may occur in the life insurance market. It occurs more frequently than one would expect. We surmise the following reasons come into play: 1. The science of life expectancy is inexact. In addition, Carriers may use one pool of data; Providers look to more individualized medical records and other personal analyses instead. 2. Short term views by management. Executives and management in big companies might be prone to take a short term view of things, in terms of sales, profits, share valuation, and bonuses. In other words, there may be a bias to sell. 3. Purchasing Power - Likewise, large insurance agencies have a certain amount of clout to get certain transactions completed. These large customers, in effect, may exert an unnaturally large influence over Carriers to complete transactions. 4. Competitive pressures to spend money - Buyers (or Providers) face their own competitive pressures to spend money. They have been allocated huge Memorandum: Arbitrage August, 2007 Integrity Life Settlements, LLC Page 2

3 lines of credit and they are 'incentivized' on results that is successfully purchasing policies. Arbitrage as a basis for Short Term Premium Financing Funders or lenders have the ability to perform forward-looking arbitrage analyses on the prospective issuance of new life insurance policies. Such institutions ask themselves the question, in effect: if this new life insurance policy is issued on Mr. Smith today, what value will the policy have in the secondary market in (let s say) two years from today? 1 On the basis of such analysis, the lender may lend today up to perhaps 75% of such value to the Insured for the purpose of premium payments during the term of loan. In theory, therefore (and contrary to traditional premium finance methods where Insureds are asked to pledge other liquid assets) the Insured may borrow funds to pay for premiums, in the short term, without placing his other personal assets at risk. (See separate memorandum on Short Term Premium Financing.) Conclusion While the Arbitrage Strategy may not always be applicable to the Life Settlements market, it is certainly worthwhile to take the simple steps to find out. Please review the accompanying brochure that explains the overall concept of Life Settlements and describes the role of our firm, Integrity Life Settlements, LLC. Please call Integrity to speak directly with either Mr. Erez Rotem, President or Mr. Alex Sirotkin, CEO for further information. *Integrity Life Settlements, LLC always suggests that a proper due diligence be performed by qualified independent professionals on any Life Settlement transaction. Integrity is affiliated with other professionals, including attorneys, accountants and actuaries, to whom a client may be referred if desired. Integrity is also always willing to work with the client s own financial and legal advisors. Alex Sirotkin, JD Erez Rotem, LUTCF Chief Executive President alex@ilifesettlements.com erez@ilifesettlements.com Integrity Life Settlements, LLC fax: Empire State Building Suite 1827 tel: Fifth Avenue, New York, N.Y toll free: Generally, there is a two-year contestability period from the issuance date, after which Carriers may no longer contest the validity of the policy contract, even in the face of misrepresentation on the part of the insured, e.g., and by reason of which the policy then becomes much more marketable in the secondary market. Memorandum: Arbitrage August, 2007 Integrity Life Settlements, LLC Page 3

4 515 Valley Street Suite 140 Life Settlement Information Form Maplewood NJ TEL: FAX: Section 1: Personal Data First Insured Name: SS #: Current Address: City: State: Zip: Date of Birth:. Telephone Numbers: Day: Evening: Second Insured Name: SS #: Current Address: City: State: Zip: Date of Birth: Marital Status: Male: Female: Have you been or are you now a party to bankruptcy? Yes No If yes, please attach all discharge papers. Section 2: Policy Owner Information Policy Owner: Name of Trustee (if owner is a Trust): Current Address: SS or Tax ID#: City: State: Zip: Telephone Numbers: Day: Evening: Marital Status: Male: Female: Have you been or are you now a party to bankruptcy? Yes No If yes, please attach all discharge papers. ***Please list any additional owners or Trustees on a separate sheet. Section 3: Beneficiaries of Policy Name of Primary Beneficiary: Name of Contingent Beneficiary: Relationship to Insured: Relationship to Insured: LS App Complete 11/4/09 page 1

5 515 Valley Street Suite 140 Life Settlement Information Form (page 2) Maplewood NJ TEL: FAX: Section 4: Life Insurance Policy Information Name of Insurance Company: Policy Number: Date of Issue: Coverage/Face Amount: $ Amount of Premium: Type of Policy (circle one) Term Whole Life Universal Life Other (specify) If a Term Policy, is it convertible to another type of policy? Yes No Policy Type: Other Loans: $ Current Surrender Value: $ Has this Policy ever lapsed? Yes No Payments up-to-date? Yes No Is this Policy Premium Financed? Yes No If yes, which Funding Source: What is the Reason for the Sale of this Policy? What are your expectations for the Sale of this Policy? Section 5: Medical History Your Height: Your Weight: Please give a brief description of your medical condition: Name of Personal Physician: Address: City/State/Zip: Telephone: Please list the names and phone numbers of any additional Physicians and/or Specialist Name Phone Any person who knowingly and with intent to injure, defraud, or deceive any insurer, files a statement of claim or an application containing any false, incomplete, or misleading information may be guilty of a crime and may be subject to fines and/or imprisonment.. LS App Complete 11/4/09 page 2

6 515 Valley Street Suite 140 Life Settlement Information Form (page 3) Maplewood NJ TEL: FAX: Please include the following documents with your application: Copy of the Policy (at closing we will need the original Policy) Insured Driver s License Insured Social Security or Medicare Card If owner is an Individual: Owner Driver s License Owner Social Security or Medicare Card If owner is a Trust: Copies of Driver s License of the Trustees Copies of Social Security Cards for the Trustees Copy of the signed Trust Agreement Copy of the Trusts W9 If owner is a Corporation: Copy of the Documents of Incorporation Current Certificate of Good Standing Copy of Corporate Resolution Authorizing Sale Copy of Corporation s W9 Copy of Corporate Bi-laws and amendments Copy of the Corporate Designee Driver s License (The person who will sign on behalf of the corporation for this transaction.) Copy of the Corporate Designee Social Security Card Names and titles of Corporate Officers authorized to sign on behalf of the Corporation (other than Corporate Designee) LS App Complete 11/4/09 page 3

7 515 Valley Street, Suite 140 Authorization to Disclose Medical Information Maplewood, NJ in Compliance with HIPAA Privacy Regulations TEL: Form ILS.HIPAA FAX: I hereby authorize each physician, doctor, physician practice group, nurse, pharmacy, hospital, clinic and/or any other health care provider identified below (each, an "Authorized Discloser") to provide Integrity Life Settlements, LLC and/or any of its affiliates, directors, officers, employees, agents, independent contractors, service providers or other authorized representatives or affiliates hereby named (all referred to as "Integrity" herein below), with any and all information and/or records as to diagnosis, treatment and/or prognosis (including any and all dates thereof) concerning my past, present or future physical or mental history or condition. I also specifically authorize each Authorized Discloser to release to Integrity the results of any HIV or AIDS test as well as any other information relating to sexually transmitted diseases, drug or alcohol abuse and psychiatric evaluations and/or information. I understand that all medical information disclosed hereunder will be used by Integrity in connection with my possible purchase and maintenance of one or more life insurance policies under which my life is insured, as well as my possible sale of an existing life insurance policy, under which my life is presently insured, into the life settlements market, and that otherwise this information will be kept confidential. I further understand that I am not required to sign this Authorization in order to obtain health care benefits (treatment, payment or enrollment). I hereby authorize my insurance company to furnish Integrity with any information or forms in connection with any life insurance policy under which my life is insured (including any conversions thereof or replacements therefore). I acknowledge and understand that I may revoke this Authorization at any time with respect to any Authorized Discloser by notifying such Authorized Discloser of my revocation of this Authorization in writing and delivering my revocation by mail or personal delivery at such address designated by such Authorized Discloser; provided, that, any revocation of this Authorization shall not apply to the extent that (i) the Authorized Discloser has taken action in reliance upon this Authorization prior to receiving notice of my revocation or (ii), if this Authorization was obtained as a condition of obtaining insurance coverage, as other law provides an insurer with the right to contest a claim under an insurance policy. I understand that this Authorization is not a consent or an authorization requested by a health care provider, health care clearinghouse or health plan covered by the privacy regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (the "HIPAA Privacy Regulations"). I further understand that, as a result of this Authorization, any of my medical information disclosed by any Authorized Discloser to Integrity may be re-disclosed by Integrity and may no longer be protected by the HIPAA Privacy Regulations. I certify that I am executing and delivering this Authorization freely and unilaterally as of the date written below and that all information contained in this Authorization is true and correct. I further certify that this Authorization is written in plain language and I fully understand its contents. I will retain a copy of this signed Authorization fur future reference. I specifically authorize and request my insurance company and each Authorized Discloser to rely upon a photo static or facsimile copy or other reproduction of this Authorization. This Authorization shall remain valid until, and shall expire on, the date one year following the date of my death. Authorized Discloser: X Name of Insured (or Proposed Insured) Signature of Insured (or Proposed Insured) date: Date of Birth Name of Witness / Social Security Number X Signature of Witness To facilitate execution, this application may be executed in as many counterparts as may be required. It shall not be necessary that the signature on behalf of all parties appear an each counterpart hereof, and it shall be sufficient that the signature on behalf of each party appear on one or more such counterparts. LS App Complete 11/4/09 page 4

8 515 Valley Street Suite 140 Authorization to Release Policy Information Maplewood NJ TEL: FAX: REVISED FOR LIFE SETTLEMENT REQUIREMENTS To the [Insert specific carrier above], the Issuer of that certain policy described as: Policy number Owner Insured I hereby authorize above-named Issuer to release all information concerning such policy, including but not limited to: forms, riders, amendments, illustrations, a true copy of such Policy, and conversations or any other communications INCLUDING TELEPHONE CONVERSATIONS between Issuer (CARRIER) and Authorized Entity relative to such information to: Name of Authorized Entity: INTEGRITY LIFE SETTLEMENTS, LLC,a life settlement brokerage, and its employees, officers and staff. This authorization is for the maximum period allowed by state law, up to a period of one year. A photocopy or facsimile of this authorization shall be valid as the original. I acknowledge receipt of the Notice of Disclosure of Information SEE ATTACHED DISCLOSURE Signature of Insured Date Full Name of Insured (Type or Print) Signature of Policy Owner Full Name of Policy Owner (Type or Print) Date SS# or EIN # of Policy Owner STATE OF: COUNTY OF: On this day, the above-named POLICY OWNER personally appeared before me who is personally known to me or proved to me with satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that for his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. Witness my hand and official seal on the day of, 200. My Commission Expires: (Seal) Personally Known to Me Produced Identification LS App Complete 11/4/09 page 5 Type: NOTARY PUBLIC

9 LIFE SETTLEMENT SUBMISSION NEW YORK CONSENT TO DISCLOSURE Policy Owner: Insured: Policy No: Insurer: Broker: (the Policy ) Integrity Life Settlements, LLC Section 7810 of the New York Insurance Code requires that with respect to all life settlement transactions governed by New York law, the policy owner and the insured must provide written consent to the disclosure of nonpublic personal information, including financial information and medical information, prior to the submission of that information by a life settlement broker to a life settlement provider or by the life settlement provider to its financing entity. The undersigned, as the Policy Owner and/or Insured under the Policy, hereby consent to the disclosure of my identity, identifiable information, and such financial and medical information (the Protected Data ) as may be necessary: (i) to allow life settlement providers (and their financing entities) to determine whether to make an indicative offer to purchase and, thereafter, to take those steps necessary to complete the purchase of, the Policy; and (ii) to allow life expectancy underwriters to issue life expectancy reports regarding the Insured. I expressly authorize the disclosure of the Protected Data to the following entities: Integrity Life Settlements, LLC, and its staff Its network of possible buyers, providers and/or financing entities Life expectancy underwriters recognized in the industry Others but only as necessary to sell the Policy into the secondary life settlements market. I understand that the Protected Data that will be disclosed to the life settlement providers (and their financing entities) and life expectancy underwriters includes, but is not limited to: o o o o o o o names; addresses; personal identifying information, including my social security number; information contained in the application for the Policy and the Policy; information held by the Insurer regarding me or the Policy; financial information; medical records and information. Name of Policy Owner Signature Date (mm/dd/yr) Witness: Date: Name of Insured Signature Date (mm/dd/yr) Witness: Date: ILSNYDisclosureConsent Rev. 11/09

10 515 Valley Street Suite140 Notice of Disclosure and Advice Maplewood, NJ Life Settlements Transactions 1. Selling your life insurance policy is an important decision. Please read over the following before making your decision. If you have any questions, please ask us. 2. Some or all of the proceeds of a Life Settlement Contract may be taxable including under Federal income tax, and/or State franchise and income taxes, and assistance should be sought from a professional tax advisor. 3. Integrity Life Settlements, LLC ( Integrity ) recommends that you retain independent advice concerning possible tax and financial consequences involved in these transactions; Integrity also recommends that you retain advice concerning legal aspects of this transaction, including review of closing documents. Neither Integrity nor it s officers, directors, or principals provide legal, accounting, or financial advice to prospective Applicants regarding the advisability or relative merits of selling or conveying their legal rights in existing life insurance policies in exchange for cash payments. An Applicant must determine the relative benefit of any such life settlement after review of the legal and financial implications of such a settlement with the Applicant s own attorney, accountant, or other appropriate advisors, only then, should a decision be made to effect such a sale or settlement. 4. We as broker represents you Owner and/or Insured ( Applicant ) in this transaction, and not the Provider (Buyer) or Insurer (Life Insurance Company). We owe the Applicant a fiduciary duty and must act in accordance with his instructions and in his best interests and in cooperation with his professional advisors. It is Integrity s role to gather health, policy and other information, send such information to possible Buyers, obtain for Applicant a market price for such policy, and to coordinate the closing, if Applicant does indeed decide to sell at the offered price. 5. The sale of your insurance policy may affect your right to receive government benefits or entitlements including eligibility for Medicaid, and advice should be obtained from the appropriate government agencies. 6. Integrity will only process your life insurance policy through licensed Providers/Purchasing Companies as applicable law requires. 7. Integrity is compensated for its services. Compensation is generally made by Life Settlement Providers/Purchasing Companies at the successful conclusion of a case and only upon successfully completing the transaction on behalf of the Applicant. Compensation may be based on a formula that is a percentage of the face value of the life insurance policy. For example, compensation on a $100,000 policy may be: 6% x $100,000 (face value) = $6, It also may be based upon a per centage of the amount paid by the Provider/Buyer. 8. There may be possible alternatives to selling your life insurance. This may include the option of an Accelerated Death Benefit if this is offered by your insurance company, or loans from the insurance company, or Cash Surrender Benefits, if any. You are advised to consult a financial advisor, certified public accountant or an attorney regarding these potential alternatives. 9. You will be informed, upon request, of the name, address, and phone number of the escrow agent that disburses your settlement proceeds. Further, you may inspect or receive copies of your escrow Integrity Life Settlements, LLC Notice of Disclosure with Life Settlement Information Request Revised April 2009 Page 1

11 agreement(s) for your settlement from the escrow agent, and all transactional documents from Integrity. 10. The proceeds of the transaction will be sent to the Applicant in accordance with the Provider s Life Settlement Contract after the Provider has received acknowledgment that the ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated in accordance with that contract. You are advised to read the contract and to consult with your legal and/or financial representative before you sign the contract. 11. Insurers processing of paperwork required to consummate a life settlement may delay payment of settlement proceeds. Do not rely on such proceeds for the timely payment or financing of other unrelated items or transactions. Delays in payment (through no fault of this firm) sometimes occur. The Insurer s time to respond for certain documentation may be controlled by state law. Insurers may have in some cases 30 days to respond to a request for Verification of Coverage, and another 30 days, e.g. to respond to a request to change ownership and beneficiary of the policy. These documents are typically required prior to your receipt of any funds. This may cause delay in your receipt of funds. 12. Once you have received your proceeds from the sale of your life insurance policy, you may have a period of days in which to rescind the transaction, depending upon the law governing the particular transaction and the Provider s internal policy. You are advised to refer to the purchasing contract supplied by the Provider/Purchaser Company regarding this matter or to consult with an appropriate independent advisor. 13. If you are covered under Pennsylvania: The viator has the unconditional right to rescind the contract for 30 days from the date of contract and at least 15 calendar days from the receipt of the viatical settlement proceeds by the viator. If the insured dies during the rescission period, the settlement contract shall be deemed to have been rescinded, subject to repayment of all viatical settlement proceeds and other payments made by the viatical settlement provider on behalf of the viator or insured to the viatical settlement provider. Funds will be sent to the viator within three business days after the viatical settlement provider has received the insurer or group administrator's acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated. 14. If you are covered under New York law, funds will be sent to the viator within three business days after the viatical settlement provider has received the insurer or group administrator's acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated. Also, the owner of a policy has a right to rescind a life settlement contract from the time of execution of the contract until fifteen days after the receipt of the life settlement proceeds by the owner. 15. If you are covered under Maryland or Pennsylvania law: By your signature below, you acknowledge receipt of the State mandated Life Settlements brochure, and you had read it and understand it. Feel free to ask us any questions concerning that or any other issues that may arise. 16. Entering into a Life Settlement Contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy, or certificate of a group policy, to be forfeited by the Applicant. In this respect, assistance should be sought from a financial adviser; 17. Entering into a Life Settlement Contract may cause limits to the insured s ability to obtain new life insurance in the future based upon insurers guidelines. There may be limits on the amount of insurance that may be purchased on the life of the insured, based upon his health or financial status. Integrity Life Settlements, LLC Notice of Disclosure with Life Settlement Information Request Revised April 2009 Page 2

12 18. All medical, financial and personal information solicited or obtained by a life settlement broker or provider about an insured, including the insured s identity or the identity of family members, a spouse or significant other, may be disclosed as necessary to effect the life settlement contract between the Applicant and Provider/Buyer. Information will be shared amongst necessary staff. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to consent to such disclosure and you may be asked to renew your consent every two years. 19. Settlement proceeds could be subject to the claims of creditors. 20. Subsequent to the transaction, the Insured and/or his designees, may be contacted periodically as specified by law and/or the Life Settlement Contract, either by the Provider or its representatives for the purpose of determining the Insured s health status. 21. Integrity Life Settlements is not affiliated with any Provider/Purchasing Company or Insurer. 22. Integrity makes no representations concerning any Life Settlement transactions that are inconsistent with the documents provided in such transactions, by Buyers/Providers, and which documents are controlling of your transaction ( Closing Documents ). 23. All medical financial or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about a viator and insured, including the viator and insured's identity or the identity of family members, a spouse or a significant other, is confidential. The information shall not be disclosed in any form to any person, unless disclosure: a. Is necessary to effect the viatical settlement between the viator and the viatical settlement provider; and b. Prior written consent to the disclosure has been provided by the viator or the insured, or both, depending upon whom the disclosure affects. This information may be provided to financing entities including individual and institutional purchasers. [This statement required to be made by law; Integrity does not however solicit buyers or providers that are not of an institutional nature]. 24. A brochure entitled 'Selling Your Life Insurance Policy: Understanding Viatical Settlements' may be obtained, upon request, from the [State Insurance] Department [in your state] in cooperation with the National Association of Insurance Commissioners Fraud Warning Any person who knowingly and with intent to injure, defraud, or deceive any insurer files a statement of claim or an application for insurance or for a life settlement which contains any false, incomplete, or misleading information may be guilty of a crime and may be subject to fines and/or imprisonment. Any person who knowingly and with the intent to defraud another presents or causes to be presented any statement forming a part of or in support of an application for insurance or viatical settlement contract any false, incomplete or misleading information concerning any fact or thing material to the insurance policy or viatical settlement contract, or any claim thereunder, commits a fraudulent viatical settlement act and is subject to civil and criminal penalties. Representations and Warranties The undersigned represents and warrants to Integrity Life Settlements, LLC that: Integrity Life Settlements, LLC Notice of Disclosure with Life Settlement Information Request Revised April 2009 Page 3

13 1. The information contained herein and in any Life Settlement Application completed by the Applicant and submitted to this firm, is complete and accurate and may be relied upon by Integrity Life Settlements, LLC and life settlement Providers/Buyers and their financing sources. 2. The proposed sale, cancellation and release of insurance policies, assignment of ownership of policies, or changes in beneficiary and irrevocable assignment of right to designate future beneficiaries of policies will be solely for the benefit and account of the undersigned, and not for the account or benefit of any other person. 3. The term Applicant as used herein refers both to an Insured and a Policy Owner relative to the policy. 4. Applicant has a clear and complete understanding of the current or future benefits of the life insurance policy being offered for sale or settlement. 5. Applicant acknowledges that he/she has freely and voluntarily provided the information requested in this application. 6. Consistent with the above, you will defend and hold Integrity harmless from any and all damages that it may incur by reason of your actions or omissions in connection with any transaction in which Integrity and Applicant are involved together. 7. Applicant acknowledges that he/she has fully read this Notice of Disclosure and Advice and fully understands it. If you have any questions, please ask us. Signature of Insured Date Signature of Policy Applicant/Owner/Viator Date By: Integrity Life Settlements, LLC Chief Executive/member Date Integrity Life Settlements, LLC Notice of Disclosure with Life Settlement Information Request Revised April 2009 Page 4

14 515 Valley Street, Suite 140 Exclusive Agency Agreement Maplewood, NJ TEL: FAX: Life Settlements Transactions For and in consideration of the mutual promises contained herein and other good and valuable consideration, as seller (hereinafter referred to as Seller ), and Integrity Life Settlements, LLC, and its licensees (hereinafter collectively referred to as Agent ) do hereby enter in this Agreement this day of 200_. 1. Exclusive Listing Agreement. Seller hereby grants to Agent the exclusive right and privilege as the agent of Seller in the procurement of an acceptable buyer and negotiation an acceptable price in relation to the sale and/or assignment in the Life Settlements Market of Seller s current life insurance policy ( the Policy ) identified as follows: Carrier: Face amount: $ Insured: Policy no. 2. Term of Agreement. The term of this Agreement shall begin on the date hereof and shall continue for a period of eight months from the date hereof (hereinafter referred to as the Exclusive Period ). 3. Agents Duties to Seller. Agent s sole duties to Seller shall be to: (a) use Agent s best efforts to procure a buyer ready, willing and able to purchase the Policy at a sales price acceptable to Seller ( the Buyer ) and (b) comply with all applicable laws in performing its duties. 4. Seller sole owner. Seller represents that the Seller is the sole owner of the Policy. 5. Seller s duties. Seller shall cooperate with Agent to sell the Policy to a Buyer including but not limited to providing further information reasonably requested by Agent. Seller shall not, during the term of this Agreement, engage any other person, firm, company or other entity or person to represent Seller in the sale or assignment of the Policy. Seller shall not, during the term of this Agreement, sell or assign the Policy in the secondary Life Settlements market without the written consent of Agent. 6. Limits on Agent s Authority and Responsibility. Seller and Agent acknowledge and agree that Agent: (a) shall owe no duties to Seller nor shall Agent have any authority to act on behalf of Seller, other than what is set forth specifically in this Agreement and (b) Agent s liability for its breach hereunder shall be limited to the amount of the commission paid to and received by Agent on account of the sales or assignment of the Policy. Seller agrees to indemnify and hold Agent harmless from and against any and all claims, causes of action, or damages arising out of or relating to Seller s breach of this Agreement. The foregoing provisions will survive the termination of this Agreement and the transfer of any title of the Policy. LS App Complete 11/4/09 page 9

15 7. Other Provisions. a. This Agreement constitutes the sole and entire agreement between the parties hereto, and no modification of this Agreement shall be binding unless signed by all parties. No representation, promise, or inducement in this Agreement shall be binding upon any party hereto unless contained herein or in subsequent modifications hereto properly executed. b. This Agreement is binding on Agent s and Seller s heirs, successors and assigns. Initial: c. This Agreement shall be governed by the laws of the State of New York. Agreed to as of the date first above written. By: SELLER Please sign name date Please print name and title (if applicable) By: Integrity Life Settlements, LLC (Agent) Authorized officer or member date EXCLUSIVE AGENCY AGREEMENT Page 2 LS App Complete 11/4/09 page 10

16 THE MAP BUILDING 515 Valley Street Suite 140 Maplewood, NJ TEL: FAX: Premium Financing Evaluation Form Name Date of Birth Height Weight Sex: M F SSN Current Address City State Zip Telephone Number (Day) (Evening) Marital Status Dependent Children: Yes No Have you been or are you now a party to bankruptcy? Yes No Annual Income Approx. Net Worth before Liabilities: after Liabilities: Additional insurance applying for (face amount) Policy(ies) held currently in force (face amount) HEALTH INFORMATION 1. Tobacco or nicotine use of any form (cigarette, cigar, chew, gum, etc.?) Yes No If yes, type, quantity, and frequency? If insured quit using tobacco, how long ago?_ 2. Have you been diagnosed with cancer? Yes No Date Diagnosed? Type and Stage, along with current status 3. Do you have cardiac problems? Yes No Date Diagnosed? Problems and treatments with current status 4. Do you have diabetes? Yes No Date of Onset Type? Have you been diagnosed with a serious condition not listed above? Yes No If so, what condition?

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