Through the formation of the Trust, the financial risks to the Insured are practically nonexistent. The Trust has been funded by a non-recourse loan secured solely by the life insurance policy (owned by the Trust). As a result, the Insured has no financial liability on the loan.

There is always the possibility that the policy owned by the Trust will not be saleable at the end of two years for an amount that exceeds the outstanding premium loans. In that situation, if the Insured decides to sell the policy in the Life Settlement market, all of the proceeds from that sale will go to the Lender in order to pay off the loan made to the Trust.

To the extent the proceeds are insufficient to pay the full amount of the loan, the Lender will be out-of-pocket the difference. Although the Insured, or his/her charity, would not receive any proceeds from the program in such a situation, neither would they have any liability for the loss or any outstanding loan balance.

While there is no direct financial risk to the Insured, the Insured's involvement in the new life insurance policy contemplated by this transaction may, depending on the facts of his/her specific situation, substantially limit his/her ability to later obtain additional new life insurance. If you plan to buy additional insurance in the future, please let your nexus solutions advisor know.