UNIFORM LIFE SETTLEMENT BROKER COMMISSION DISCLOSURE STATEMENT

Transcription

1 Selling Policyowner: Policy Number: Policy Issuer: Insured: Life Settlement Producer Broker: Life Settlement Producer Broker: Life Settlement Transaction Broker: Life Settlement Transaction Broker: Life Settlement Provider: DESCRIPTION OF A LIFE SETTLEMENT TRANSACTION A. There are various parties involved in a life settlement transaction, including the selling policyowner, a life settlement provider, an escrow agent, and one or more life settlement brokers, one of whom oftentimes is a life insurance agent who also provides life settlement broker services and indeed is the life settlement producer broker who communicates with directly the selling policyowner. The specific parties involved in the sale of your life insurance policy in a life settlement transaction are identified above. In a typical life settlement transaction, one or more life settlement brokers will act as your representative in connection with the sale of your life insurance policy to the life settlement provider. B. Although state laws vary, generally speaking, life settlement brokers, including life insurance agents who are authorized to act as life settlement brokers, have a duty of good faith and fair dealing and have a fiduciary duty to you, the selling policyowner. These life settlement brokers work for and represent the interest of the selling policyowner and do not work for or represent the life settlement provider. The life settlement provider is the purchaser of the policy in an arm s length transaction with the selling policyowner, and the life settlement provider represents itself in the life settlement transaction. Usually, the life settlement provider places the proceeds that it pays for its purchase of a life insurance policy in a life settlement transaction, inclusive of the net proceeds paid to the selling policyowner and all commissions paid to the life settlement brokers that represent Page 1 of 5

2 the selling policyowner, with an escrow agent into an escrow account established at a bank or other qualified financial institution by the life settlement provider. The escrow agent may be, but not always is, the bank or other qualified financial institution at which the escrow account is maintained. Upon the closing of the life settlement transaction, the escrow agent disburses from the escrow account (a) directly to the selling policyowner the net proceeds that the life settlement provider pays to the selling policyowner, which is an amount less than the gross purchase price paid by the life settlement provider as reduced by all broker commissions, and (b) directly to the life settlement broker, or if there is more than one life settlement broker, to the life settlement transaction broker, who, in turn, will pay the life settlement producer broker, all commissions that the selling policyowner has agreed to pay to the life settlement brokers that represent the selling policyowner. C. Consummating a life settlement transaction involves a significant amount of work. There are numerous responsibilities, and it can be a fairly time consuming process. A life settlement broker will typically obtain and provide to life settlement providers: various policy information, financial information releases by the selling policyowner, health or medical information releases by the insured, health or medical information or records about the insured, policy illustrations, verification of insurance coverage, life expectancy reports for the insured and other information about the life insurance policy, the selling policyowner and the insured requested by life settlement providers necessary for the life settlement broker to obtain on behalf of the selling policyowner offers to purchase a life insurance policy from multiple life settlement providers. D. The life settlement broker should provide you with full disclosure of all purchase offers that the life settlement broker receives on your behalf from life settlement providers. Life insurance agents, who also act as life settlement producer brokers, typically work with and through other qualified life settlement transaction brokers, in procuring offers to purchase a life insurance policy from life settlement providers and negotiating a purchase price for the sale of a life insurance policy in a life settlement transaction. Typically, such a qualified life settlement transaction broker and, if authorized under applicable state law to act as a life settlement broker, the life insurance agent who serves as the life settlement producer broker, share the broker commission payable in a life settlement transaction. Each life settlement broker is generally required to (a) Page 2 of 5

3 disclose to a seller of a life insurance policy in a life settlement transaction the method of calculation and the amount of the commission that the life settlement broker will receive for the life settlement broker s services rendered to the selling policyowner and (b) enter into a written agreement with the selling policyowner for the payment of the life settlement broker s commission before performing any life settlement brokerage services for, and receiving payment of any compensation from, the selling policyowner. Life settlement broker commissions are usually calculated as a percentage of the net death benefit payable under the life insurance policy being sold. Typically, the life settlement broker commission is deducted from the proceeds paid by the life settlement provider to the selling policyowner for the life settlement provider s purchase of the life insurance policy. LIFE SETTLEMENT BROKER COMMISSION FOR YOUR LIFE SETTLEMENT TRANSACTION A. By signing this Uniform Life Settlement Broker Commission Disclosure Statement below, you hereby acknowledge and represent to, the life settlement provider, that: Before your life settlement brokers performed any life settlement brokerage services for you, you have entered into, and received a copy of, a written agreement with your life settlement brokers for the payment of the life settlement brokers commission, which you have authorized to be disbursed from the proceeds payable by, the life settlement provider, for its purchase of your life insurance policy. Each of your life settlement brokers has previously disclosed to you the method of calculation and the amount of the life settlement brokerage commission that such life settlement broker will receive from your life settlement transaction. Your life settlement brokers will receive, in the aggregate, a commission in an amount equal to % of the net death benefit payable under your life insurance policy being sold to, the life settlement provider. The life settlement broker may distribute the broker commission to other parties representing you in this life settlement transaction, if such parties are authorized under applicable state law to act as life settlement brokers, including your life insurance agent, if any. Page 3 of 5

4 will pay all life settlement broker commissions out of the proceeds of the purchase price paid for the above referenced life insurance policy. These commissions will be paid on your behalf directly to the life settlement broker and/or life insurance agent authorized under applicable state law to act as a life settlement broker. The net cash amount you will receive for the sale of your life insurance policy to will be less than the gross purchase price paid by, with the difference being the broker commission paid directly to your life settlement broker commissions by out of the proceeds of the gross purchase price for your life insurance policy. LIFE SETTLEMENT VALUE RECEIVED BY SELLING POLICYOWNER Had you surrendered your life insurance policy to the life insurance company that has issued your policy, you would have received from the life insurance company $ (the Cash Surrender Value ) based on the policy illustration for your life insurance policy as provided to by your life settlement broker. The net purchase price you received from for its purchase of your life insurance policy is $. This represents an additional % greater than the Cash Surrender Value 1. As a result of the efforts and services of your life insurance agent (if any) and your life settlement broker (if any), you received $ more than if you had surrendered your life insurance policy to the life insurance company. 1 If CSV is zero it is assumed to be $1 for purposes of this calculation. Page 4 of 5

5 Date: SELLING POLICYOWNER: [Name of Selling Policyowner]