06 Jun FAQ and Definitions for Funding Escrow Details and Account Summary Report

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LIFE PARTNERS, INC. BANKRUPTCY

FAQ and Definitions for Funding Escrow Details and Account Summary Report
May 31, 2016

 

FAQ – Funding Escrow Details and Account Summary Report:

 

  1. What is the Funding Escrow Details and Account Summary Report?

 

It is a report that details all the monetary transactions that occurred for a particular investor interest.

 

  1. How do I find the Funding Escrow Details and Account Summary report that supports the Account Statement that I was sent?

 

Log in to LPI-Policies.com with your login credentials and click on the “Reports” tab and then click on the magnifying glass located next to the report called “Funding Escrow Details and Account Summary.”  The report will then generate.

 

  1. The Funding Escrow Details and Account Summary report for one of my interests shows that I started off with a negative escrow balance. How can that be correct?

 

In certain cases, when investors purchased re-sale or “abandoned” positions, a negative balance may have already existed, and that balance carried forward to you, the new owner.

 

  1. How do I calculate my beginning escrow balance for a policy escrowed at PES?

 

Generally speaking, you would take the “Closing Acquisition” amount (which is the amount originally invested) and subtract the amounts called “Closing Seller,” “Closing-LPI Fee,” and “Closing-Escrow Agent Fee”.

 

For policies at ATLES, the beginning escrow balance can be found under the description, “Escrow Deposit @ Closing.”

 

  1. I noticed that there are certain years for which no premium payment was sent to the insurance carrier. Why is that?  How was the policy kept in force?

 

There could be any number of reasons why a payment was not sent to the insurance carrier, such as the existence of a waiver of premium rider on the policy, the premium was paid by the employer, the cash surrender value was being utilized, etc.

 

  1. On one of my policies, there are six payments sent to the insurance carrier but I paid my premiums only twice that year. Why were so many payments made, all in varying amounts?

 

In certain cases, if investors were slow to remit their premium payment to LPI, the escrow agents made multiple payments to the carriers as funds were received from investors.

 

  1. In the “running balance” column I see certain numbers with parentheses around them and I see other numbers without parentheses around them. What is the difference?

 

Numbers with parentheses around them indicate negative numbers (amounts subtracted from the account). For example, when premium funds were paid to the carrier, the amount would be in parenthesis.

 

  1. Why do I owe past due premiums for the timeframe prior to the end of the life expectancy (LE) originally assigned by LPI/Dr. Cassidy?

 

All premiums paid on your behalf, for your pro-rata interest in the policy, are included in the statement.

Definition of Terms –  Funding Escrow Details and Account Summary Report:

 

Please note, different terminology was/is used in the reports for policies escrowed at PES than in the reports for policies escrowed at ATLES.  Below are definitions for each set of terms used in the reports you generate when you log in to your account(s) at lpi-policies.com.

Terms Used for Policies Escrowed at PES:

 

  • Closing Acquisition: The amount originally invested to purchase a fractional interest.

 

  • Closing Seller: The fee paid to the policy owner (seller) when LPI originally brokered the policy to investors.

 

  • Closing-Escrow Agent Fee: The fee assessed by the escrow agent when the policy was originally brokered by LPI.

 

  • Closing-LPI Fee: The fee assessed by, and paid to, LPI at the time the policy was originally purchased.

 

  • Closing-Loan: Sometimes the policy owner had an outstanding loan against the policy.  In certain cases, LPI would pay the balance of the loan and deduct the amount of the loan from the proceeds ultimately paid to the seller.

 

  • Closing-Miscellaneous: This was a miscellaneous fee associated with the closing of a given policy.  For example, it could have been a fee to send a wire, pay a courier, etc.

 

  • Escrow Agent Fee Charged: This was the fee paid to the escrow agent.

 

  • Escrow Adjustment Due to Account Change: This was a fee assessed when a policy interest was either re-registered, sold, or purchased.

 

  • Escrow Adjustment Due to Account Change: If a re-sale purchaser bought an interest in a given policy and a premium balance was owed, the obligation was transferred to the new owner.  Alternatively, sometimes this adjustment could be a positive amount, when there were funds still remaining in the escrow account of the prior owner.

 

  • Insurance Premium Payment to Carrier: The amount of a premium payment paid to the carrier for the policy interest.  This dollar amount represents the pro rata premium obligation paid for your interest in the policy.

 

  • Insurance Premium Refund from Carrier: This amount was paid to LPI by the carrier, most likely in the form of a dividend or a premium refund.

 

  • Maturity Deposit-Death Benefit: This entry indicates the payment of an investor’s pro rata share of the death benefit of a given policy.

 

  • Maturity Deposit-Interest: The amount of interest paid by the carrier (on the death benefit) that was credited to the account.  Note:  Under certain circumstances carriers are required to pay interest on the amount of the death benefit.

 

  • Maturity Deposit-Premium-Refund: The amount of funds escrowed at purchase that were not paid to the carrier and thus refunded/credited to the account.

 

  • Maturity Deposit-Additional Death Benefit: The amount of funds credited to the account because the insurance policy paid out more death benefit than the initial face amount of the policy (this additional amount was pro-rated and paid out to all investors in the policy).

 

  • Maturity Deposit-Miscellaneous: The amount of funds credited to the account because the insurance policy paid out more than the initial face amount of the policy (this additional amount was pro-rated and paid out to all investors in the policy).

 

  • NonRefundable Contribution: This was an amount that LPI paid to the carrier for which LPI indicated it did not intend to bill the investors.

 

  • Ownership Change: The date the ownership interest was either purchased or transferred into your account.

 

  • Premium Contribution Deposit from Investor: This is an amount received from an investor for his/her pro rata share of the premium obligation.

 

  • Premium Contribution Refund to Investor: An amount refunded to the investor or the appropriate IRA custodian holding the investor’s account.

 

  • Premium Contribution Deposit from Maturity Funds via Voluntary Instruction Form:

The amount of funds that were transferred to this account following receipt of your request via a Voluntary Use of Funds Instruction Form.

 

  • Premium Contribution Transfer to Another Fractional Position via Voluntary Instruction Form: The amount of funds transferred from this account to another following receipt of your request via a Voluntary Use of Funds Instruction form.

Terms Used for Policies Escrowed at ATLES:

 

  • Escrow Deposit @ Closing: The amount of funds initially placed in the escrow account.

 

  • Escrow Deposit via Account Transfer: The amount of originally escrowed funds that were transferred from the original position holders account.

 

  • Escrow Refund: The amount of funds, remaining from the original escrow deposit, that were refunded at the time of the policy’s maturity.

 

  • Lien Received via Account Transfer: An accounting of an amount carried forward from a previous owner.  This entry occurs when a fractional position was sold by one investor and purchased by another investor.

 

  • Lien Transferred via Account Transfer: When a fractional position was re-sold to a new investor, sometimes liens transferred to the new owner which were subsequently paid off by the seller of the fractional position.

 

  • Lien Payback to LPI: An amount that was advanced by LPI (so that the premium was paid to the carrier in a timely manner) that was later received from the investor and ultimately paid back to LPI.

 

  • Non-Refundable Advance: An amount paid to the carrier on behalf of the investor.

 

  • Premium Check Deposit: An amount received from an investor to pay his/her share of the premium expense.

 

  • Payment Debit, Initiated at ATLES: The amount of premium paid to the carrier by ATLES.

 

  • Payment Debit, Initiated at LPI: The amount of premium paid to the carrier by ATLES, but initiated by LPI.

 

  • Refundable Advance: An amount paid to the carrier on behalf of the investor