Life Settlement Financial, LLC P.O. Box 3437 San Rafael, CA 94912-3437 Tel: (415) 526-5970 Fax: (415) 526-5971 inquiries@lifesettlementfinancial.com Disclosure Statement for Life Settlement Contracts Read this disclosure statement before signing any life settlement Contract. Oregon law permits a policy owner to sell his or her life insurance policy. This sale is referred to as a life settlement. Oregon state law requires the settlement broker or provider to furnish you this disclosure at the time you sign the application to sell your policy. This life settlement contract is an arrangement in which you will sell or assign the death benefit or ownership of your life insurance policy to the life settlement provider of your choice. In return, the life settlement provider will pay you a negotiated amount for the sale or assignment. In place of the legal term life settlement provider, the term life settlement company may be used in this disclosure statement. This statement contains general information that will help you make a decision regarding your life insurance policy. This statement also contains blanks for specific information about your policy and a life settlement company s offer to you that the life settlement company will fill when it makes the offer. This information will help you make a careful comparison of your life insurance policy benefits and the benefits you receive if you sell your policy. Other options If you are thinking about a life settlement contract, you should consider the possible disadvantages and look at other options. Some options may allow you to meet your needs and also keep part or all of your life insurance policy. These options also may reduce or eliminate tax liability and other possible costs, such as a loss of government benefits that may occur if you receive cash from a life settlement. Some of these disadvantages are described later. Talk to your insurance company or agent You should first contact your insurance company or the insurance agent who sold you the life insurance policy to discuss the following options: Many insurance policies offer accelerated benefits and will pay you a percentage of the expected death benefit while you are living. This option may enable you to retain ownership of any policy balance and may pay a higher percentage of the death benefit. Many insurance policies allow the policyholder to take out a loan on the policy or withdraw cash from the policy up to the level of its current cash value. Either option also may enable you to 1 -
retain ownership of your policy. The amount may be as much as you would receive in a life settlement. Talk to your tax advisor You should contact your tax advisor or other knowledgeable party to help you determine if some or all of the proceeds you receive in a life settlement are taxable income under new IRS Revenue Ruling 2009-13. Check available services Ask about existing services and support that may meet your needs. Following are some agencies that will provide information on available services: Senior and Disabled Service Division (SDSD) of the Oregon Department of Human Resources. Check the State Government section of your phone book for the office in your area. The SDSD office will also give you the location and phone number of your local Area Agency on Aging. Social Security: (800) 772-1213 Oregon Health Plan: (800) 359-9517 Oregon Medical Insurance Pool (for people who ve been refused health insurance coverage or can t get health insurance at a reasonable cost because of preexisting medical conditions): (800) 542-3104 Oregon HIV Advocacy Center (for people with HIV disease). Information on life settlement contracts also available: (800) 777-2437, ext. 151 Community Health Insurance Program (for people with HIV disease). Information on life settlement contracts also available: (800) 805-2313 Medicare is a government health insurance program for people 65 and over, some people under the age of 65 with disabilities, and people of any age living with permanent kidney failure. It pays for many health care expenses but does not cover them all. Medicare has limits on the type of care it will pay for and for how long. For example, Medicare covers only medically "reasonable and necessary" care and does not cover personal care that helps you with things like bathing, dressing, etc. 1-800-633-4227 Loans You might be eligible for a loan from a lender, using your insurance policy as collateral, or you may be able to obtain a loan from a relative or a friend, although such loans are without consumer protections. Be sure you understand the following about life settlements Life settlements may have the following disadvantages: Some or all of the proceeds of a life settlement payment may be taxable. You should seek advice from a professional tax advisor. 2 -
A life settlement payment may cause you to lose your eligibility for Medicaid or other government benefits or entitlements. You should seek advice from your local Senior and Disabled Services Office, Social Security, and other appropriate agencies. Pertinent information is provided by the State Department of Health Care Services and the State Department of Social Services under Section 11022 of the Welfare and Institutions Code. A life settlement payment may be subject to the claims of creditors. 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 owner and that assistance should be sought from a professional financial adviser. A change in ownership of the settled policy could limit the insured's ability to purchase insurance in the future on the insured's life because there is a limit to how much coverage insurers will issue on one life. Shop around Different life settlement companies may offer you widely differing amounts to buy your life insurance policy. It s important for you to get quotes from several different life settlement companies before signing a life settlement contract. State law requires that life settlement companies be licensed by the state and that payment for a life insurance policy meet standards relating to life expectancy estimates. Life settlement companies must estimate life expectancy according to sound actuarial principles, but individual life settlement companies could make different life expectancy estimates. If you want a list of life settlement companies licensed to do business in Oregon call the Insurance Division (503) 947-7981. If you need cash now: Consider the options offered by your insurance company Get quotes from as many life settlement companies as possible You have a right to know the following: The life expectancy figure the life settlement company is using. The amount a life settlement company offers you depends on various factors, including average life expectancies for persons with the given condition or illness, and the terms of our life insurance policy contract, including the future premiums to be paid by the life settlement company after they take on that obligation. The Life Settlement Contract Proposal The life settlement company offering to buy your life insurance policy is: Name: 3 -
Address: Oregon license number: The names, addresses and telephone number of the broker(s) in this transaction are: Name: Address: Telephone Number: Name: Address: Telephone Number: The name, address and telephone number of the independent third-party escrow agent: The policyowner may inspect and receive copies of relevant escrow or trust agreements or documents. The life insurance policy you are proposing to sell is with: Insurance company: Policy number: Yes, your policy has an accelerated death benefit. No, your policy does not have an accelerated death benefit. Yes, your policy is jointly issued on more than one life No, your policy is not jointly issued on more than one life The contract you are considering would sell your death benefit. The amount of the expected death benefit is $. If joint death benefit, additional person: Amount: The expected death benefit is defined by the insurance policy you are considering selling as of the date the life settlement contract is signed. The gross purchase price the life settlement provider is paying for the policy $. The amount of the purchase price to be paid to the owner $. The amount of the purchase price to be paid to the owner s life settlement broker $ This amount represents % of the expected death benefit. 4 -
Offers to buy your insurance policy were received from the following licensed providers: Amount $ Amount $ Amount $ The following licensed providers did not make an offer to purchase your life insurance policy after reviewing the submitted information: Your life expectancy estimates were: LE underwriter Life Expectancy Estimate (in months) LE underwriter Life Expectancy Estimate (in months) LE underwriter Life Expectancy Estimate (in months) LE underwriter Life Expectancy Estimate (in months) The relationship, if any, between the life settlement provider or broker and the issuer of the insurance policy to be settled. The relationship between the life settlement company and the broker(s) is as follows.. Cancellation of contract You have a right to cancel the life settlement contract. You have a right to rescind a life settlement contract within 30 days of the date it is executed by all parties and the owner has received all required disclosures, or 15 days from receipt by the owner of the proceeds of the settlement, whichever is sooner. Rescission, if exercised by the owner, is effective only if both notice of rescission is given and the owner repays all proceeds and any premiums, loans, and loan interest paid on account of the provider within the rescission period. If the insured dies during the rescission period, the contract shall be deemed to 5 -
have been rescinded subject to repayment by the owner or the owner's estate of all proceeds and any premiums, loans, and loan interest to the provider. Additional things that you should know Proceeds will be sent to the owner within three business days after the provider has received the insurer or group administrator's acknowledgment that ownership of the policy or the interest in the certificate has been transferred and the beneficiary has been designated in accordance with the terms of the life settlement contract. All medical, financial, or personal information solicited or obtained by a provider or broker about an insured, including the insured's identity or the identity of family members, a spouse, or a significant other may be disclosed as necessary to effect the life settlement contract between the owner and provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two years." The insured may be contacted by either the provider or the broker or its authorized representative for the purpose of determining the insured's health status or to verify the insured's address. This contact is limited to once every three months if the insured has a life expectancy of more than one year, and no more than once per month if the insured has a life expectancy of one year or less. A broker represents exclusively the owner, and not the insurer or the provider or any other person, and owes a fiduciary duty to the owner, including a duty to act according to the owner's instructions and in the best interest of the owner. 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 to be forfeited by the owner and that assistance should be sought from a professional financial advisor. A change of ownership could in the future limit the insured s ability to purchase future insurance on the insured s life because there is a limit to how much coverage insurers will issue on one life. Additional benefits and riders You have the right to keep additional benefits or optional riders that are part of your current policy. You do not have any additional benefits or optional riders attached to your policy. (You may skip the rest of this section.) or 6 -
The following additional benefits or optional riders are attached to your policy. The life settlement company understands that you will continue the benefits and riders checked Yes. The sale price takes into account the cost of continuing them. Benefit or rider Premium Continues? $ Yes No $ Yes No $ Yes No The life settlement company must notify you of any options that arise under these continued benefits or riders, and must carry out any request by you to change the beneficiary for any of those benefits or riders. The life settlement company will pay all premiums for those benefits or riders so they will be available for your beneficiaries. The life settlement company has the right to adjust its offer to cover the cost of the premiums the company will pay to keep the additional benefits or riders in force. Any benefit or optional rider that is not continued by the policyholder or certificate holder will end. Important reminder If there is anything about the life settlement contract that you do not understand, don t sign it. Seek legal advice. The Oregon Insurance Division can help you understand your rights and responsibilities. If you have questions or need assistance, call the Insurance Division in Salem, 503 947-7980. Signatures after reading this disclosure document Fraud Warning: Any person who knowingly presents false information in an application for insurance or life settlement contract is guilty of a crime and may be subject to fines and confinement in prison. California law requires that after reading this disclosure form the policyowner and the settlement provider or broker sign and date this disclosure form. Date: Policyowner(s): 7 -
Life Settlement Provider: Broker(s): 8 -