- 1. What are the functions of the “The Subscription Escrow Account,” “The RLS Trust” and “The Premium Reserve Account?”
- 2. What is the minimum allowed investment?
- 3. Can I use my retirement accounts, such as an IRA or 401k, to invest in life shares?
- 4. Can I roll my annuity into this investment?
- 5. Are fractional life settlements the same as viatical settlements?
- 6. Can I invest in life settlements through my CPA, financial planner, banker, or stock broker?
- 7. Can I invest in multiple policies?
- 8. What type of policies do we offer?
- 9. What is your typical annual rate of return?
- 10. What is the effect of premium refunds and premium calls?
- 11. Does Reliant Life Shares use the same proven, third-party life expectancy reports (LEs) as institutional buyers?
- 12. How does Reliant Life Shares make money?
- 13. How can I hold title to this investment?
- 14. What information will Reliant provide me about the policy and the insured?
- 15. Do you provide a Verification of Coverage from the life insurance company showing the policy I am invested in is in force?
- 16. When a policy matures, what happens?
- 17. If I pass away before the investment pays out, do my heirs still get paid?
1. What are the functions of the “The Subscription Escrow Account,” “The RLS Trust” and “The Premium Reserve Account?”
Christiana Trust acts as the Escrow Agent and Trustee for all our fractional life settlement transactions.
❶ The Subscription Escrow Account – Christiana Trust acts as escrow agent and accepts the investor’s funds into this account until the investor selects their desired policy or policies. The flexibility of this account allows investors to withdraw their money any time without a penalty. Investors who place their funds in the Subscription Escrow Account have the advantage of participating in Reliant Life Shares’ most desirable polices before they become available to the general investor pool.
❷ The RLSS Trust – all policies purchased by Reliant Life Shares are held by the Reliant Life Shares Series Trust (RLSS Trust), with Christiana Trust acting as Trustee, for the sole benefit of its fractional life settlement investors.
❸ Premium Reserve Account – once the investor selects their policy or policies, the Trustee transfers their funds from the Subscription Escrow Account to secure their purchase and funds the Premium Reserve Account, which is administered by Christiana as Trustee. The Trustee makes certain that all required premiums are paid from the Premium Reserve Account.
Once the policy matures, Christiana Trust will file the appropriate claim with the highly-rated life insurance company. The investor, who owns the beneficial interest in the policy, will receive their proportional, pre-determined share of the policy proceeds.
Our minimum investment is $20,000, which can be funded with cash or retirement accounts such as an IRA (Traditional, SEP, Roth) and 401K, 403B, etc. Our office can help facilitate the transfer/rollover process.
3. Can I use my retirement accounts, such as an IRA or 401k to invest in your fractional life shares?
We use Entrust IRA Services, a third-party administrator, to act as custodian for investors with IRA/401K accounts. Upon opening an account with Entrust, the investor simply transfers or rolls funds from their existing retirement account into the newly established Entrust IRA account. Once funds are received, the investment is then placed in the investor’s IRA account, which then owns the investment.
Yes, this is quite popular with our investors as many often roll their annuities into this investment. Consult your tax professional for qualifying details.
No. A life settlement typically refers to an insured over the age of 65 with a life expectancy of less than 13 years. These may be people who have had a significant change in their overall health, but who aren’t terminally ill. On the other hand, a viatical settlement usually applies when the insured has a life expectancy that is less than two years and is typically terminally ill. Reliant offers investments in life settlements, not viatical settlements.
Very doubtful. Because this investment is an alternative asset, most CPA’s, financial planners, bankers, and retail stock brokers are not familiar with institutional life settlement investments. California investors should seek a reputable proprietary offering company with trained and licensed life agents, such as Reliant Life Shares.
Absolutely. Most of our investors choose to spread their investment over multiple policies with varying maturity dates, similar to how a bond portfolio is “laddered.” For example, an investor can place $100,000 into four different policies, at $25,000 each, with different expected dates of return, diversifying their investment into this alternative asset class.
The only type of polices we offer for investment are universal life polices from highly-rated, U.S.-based, Legal Reserve life insurance companies such as Pacific Life, AXA, and John Hancock to name a few.
Each investment varies and most investments average an expected rate of return of about 12-14% per year. Reliant Life Shares offers investors a fixed return and as such, they do not receive annual payments. As an example, if you were to invest $50,000 on a policy paying a 100% fixed return, and the death benefit paid out as expected at the end of the insured’s seven year life expectancy, then you would receive a lump sum payout of $100,000 which equates to an annual return of about 14%.
With the premium refund feature, Reliant Life Shares will return to investors all unearned premiums held in escrow if the policy matures earlier than the insured’s life expectancy (LE). This premium refund will be paid in addition to the investment gains from the policy’s maturity. Conversely, if the insured lives beyond life expectancy, the investor, as a fractional owner of the policy, would be required to pay his or her pro-rata portion of the premium as a premium call. This would effectively lower the net return to the investor.
11. Does Reliant Life Shares use the same proven, third-party life expectancy reports (LEs) as institutional buyers?
Yes. It’s no secret that some fractional life settlement companies use “in-house” LE reports and avoid using LEs from the same proven, third-party medical underwriters (AVS, 21st Services, Andersen Consulting, LLC, Fasano, and EMSI) that institutions rely on to make their investment decisions. Using industry-accepted LEs typically results in a longer, more conservative LE. A longer LE means escrowing more premium payments and as a result less profit to the fractional life settlement company. This is important because longer-than-expected life expectancies mean lower-than-advertised returns for investors in those policies.
At Reliant Life Shares, it is our core belief to “put ourselves in our investor’s shoes.” In fact, we typically retain a 3-10% ownership in each policy, investing right alongside our investors.
Reliant Life Shares charges no fees or loads. Rather, our margin is realized between what we raise from our investors and our total costs in a policy.
For example, if Reliant Life Shares purchases a $1,000,000 policy and offers investors a 100% fixed return, we would have to raise $500,000 from investors.
If we buy that same policy for $250,000 and reserve premiums of $200,000, our cost would be $450,000.
Once this policy has sold out, Reliant would profit $50,000. This $50,000 represents the difference between what we bought the policy for ($450,000), and what we raised, or $500,000.
Our investors, who invested a combined $500,000, would be paid the $1,000,000 benefit upon policy maturity, giving them a 100% total fixed return.
Many of our clients chose to put this investment in their living trust, or company’s name. All the investor needs to provide is a copy of the corporate/trust documentation as well as that entity’s tax I.D. number.
California has strict laws regulating this investment and the precise disclosures made to an investor before any investment can be placed. Investors should go online or ask their representative for the sample RLS Case Summary™, which will provide them with essential information so that they can make an informed investment decision. The RLS Case Summary™ is broken down into three sections: Carrier’s Information, Insured’s Information, and Premium Escrow & Investor’s Fixed Returns, and discloses the following information:
- Carrier’s Information includes: Carrier Name, Policy #, Policy Issue Date, Carrier Rating, Policy Type, Death Benefit, Annual Premiums and Date Premiums Due.
- Insured’s Information includes: Age, Gender, DOB, Life Expectancies as well as a Summary of the Insured’s Medical Condition.
- Premium Escrow & Total Fixed Returns: Premium Escrow shows the investor the total amount of premium dollars that Reliant Life Shares will deposit into escrow. Total Fixed Return displays the investor’s Fixed Return Amount upon policy maturity. It will also calculate the annual rate of return based on the projected LE.
15. Do you provide a Verification of Coverage from the life insurance company showing the policy I am invested in is in force?
Upon request, Christiana Trust will provide any investor with a Verification of Coverage from the life insurance company showing that the policy is indeed in force.
Once the policy matures, Christiana Trust will file the appropriate claim with the highly-rated insurance company. The investor, who owns the beneficial interest in the policy, will receive their proportional, pre-determined share of the policy proceeds.
Yes. The fractional life share investment would pass to your heirs like any other asset you currently own.