Frequently Asked Questions

RECENT FAQs REGARDING PWCG BUSINESS & PENDING SEC LITIGATION

SEC Litigation Update

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Current Investor Recent FAQs

What is the minimum investment? Can I use my IRA or 401k or any type of qualified vehicle to fund a life settlement investment?

The minimum investment is $20,000. You have many choices for funding a life settlement investment with PWCG. These range from cash to retirement accounts such as IRA (Traditional, SEP, Roth) and 401K, 403B, etc. We use a third party administrator to act as custodian for our IRA accounts. Upon opening an IRA, you would transfer/rollover funds from your existing retirement account into the new IRA. Once funds are received, the investment is then placed with your IRA account, which then owns the investment.

Are life settlement transactions regulated? By whom?

Yes. Without a doubt. In California, investments in life settlements are considered securities and therefore are regulated by the Securities Division of the CA Department of Corporations, as set forth through legislation with the passage of Senate Bill 1837.  This legislation allows for Pacific West Capital Group to offer and sell investments in life settlements to qualified investors under an exemption from qualification of its offering with the CA Department of Corporations.

Oh, I’ve heard of this. Isn’t this a viatical settlement?

No. A viatical settlement applies only to policies of people who have a terminal illness. Such people could be of any age. Life settlement policies are based on the insured’s advanced age alone. We focus on life settlements because we don’t want to expose our investors to risk due to the subjectivity of health diagnosis. With a viatical settlement, an unexpected cure, a new drug, or a new treatment could result in the insured living for years or even decades beyond the expectation. Since we buy policies from seniors, the time frame is much narrower because there simply is no cure for old age.

What documentation do I get to show for my investment?

As evidence of an investor’s holdings, you will receive copies of your signed purchase agreement and policy disclosure form, a deposit receipt from the escrow company, a copy of the recorded changes of ownership and beneficiary rights, and an assignment of death benefit showing your beneficiary designation issued by the Trustee.

Can I put my money into more than one policy?

Sure. You can place your money in as many policies as you wish depending upon availability. For example, you can invest $100,000 in a single policy or invest a minimum of $20,000 in several policies.

Can I buy this through my stock broker, financial planner, or bank?

No. This vehicle is a proprietary offering. If you invest into it, you would do so through the offering company (PWCG), whether you use cash or an IRA to fund the vehicle.

What annual rate of return should I expect?

You don’t receive annual payments, so there is no annual rate of return as such. You do receive a 100% total fixed return or higher. Your hypothetical annual rate of return is determined by the duration between purchase of the investment and when the investment pays off. For example, with a policy paying a 100% total fixed return, an investment of $100,000 in the policy will return $200,000 upon maturity.  If that term is five years, your annual rate of return would, in effect, be 20%. If it’s six years, your return would be 16-17%. We buy policies from insureds 75 years of age and older with chronic or degenerative health conditions. As you know, we cannot predict exactly when an insured will pass away, but upon policy maturity you will receive double your investment amount or higher, depending on the policy in which you invest.

How long after I give you money is the investment placed?

After funds go to the escrow agent, the investment can usually be implemented within a couple of business days. However, there is a five-day waiting period after the policy disclosure form has been received and is being reviewed by you.

What kind of policies does your company buy for this investment?

We select only Universal Life, also known as Flexible Premium Adjustable Life policies. We never buy any type of term policy.

Can I put this investment in my company’s name, living trust name, etc.?

Yes. Virtually any entity that has a tax I.D. number or social security number can invest into our life settlement investments.

Can I roll my annuity into this investment?

If you use annuity money, it would be subject to taxes on the portion rolled out, and any applicable penalties the government would impose if you are younger than 59 1/2 would apply. However, if your annuity is held within your IRA account, penalties would not apply because the investment would be an IRA to IRA transfer.

What information do I get about the policy and the insured?

Per California laws, strict disclosures exist as to the information you must receive before any investment can be made and money distributed from escrow. You receive this information in the policy disclosure form that you sign, which designates the policy that your money is invested in. You also receive the name of the life insurance company, policy number, face value amount of the policy, annual premiums for the policy, type of policy, life insurance company rating, age of the insured, and sex of the insured.

How do I know if the policy is in force?

Premiums are paid through the policy premium reserve structure we have established. However, we can supply you with a verification of coverage from the life insurance company.

If I die before the investment pays out, what happens?

The investment would transfer to your heirs per your will or living trust. Your heirs would be required to contact the Trustee, Mills, Potoczak & Co., to re-register the asset to the new assignee.

How do I know I’ll get paid my return?

This is exactly why we use bonded entities to process all the money through the transaction. Mills, Potoczak & Co. has extensive experience and a flawless reputation as an escrow agent and trustee in this industry. In addition, Mills, Potoczak is a founding member of the largest nationwide organization pertaining to life settlements. And remember, the life insurance company, which will be at least an A-rated U.S. company, is going to be paying the beneficiary designation directly.

What if someone sues the trustee, escrow agent, or Pacific West Capital Group?

Investment assets, such as the policies and the premium accounts, are owned by the PWCG Trust. If someone were to sue Pacific West Capital Group, the trustee, or the escrow agent, he/she could not attach the assets of the Trust as they are not owned by any of the three entities.

How does your company make money?

There are no fees or loads from us. We make a margin above:
1) what we pay for the policy; and 2) costs of funding the premium accounts.
For example, if a $1,000,000 face value policy costs us $300,000 plus premium reserves of $100,000, we can sell shares for $500,000 giving us a $100,000 gross margin. The investors who put up the $500,000 will be paid the full $1,000,000 face value from the life insurance company, giving them a 100% total fixed return. If a policy costs us less money, or if the premiums are not as high, for example, we could sell shares for $400,000, giving the investor a 150% total return, and still preserve our margin percentage.

What if PWCG goes out of business?

The prosperity of our company does not affect you at all. We never touch your funds. Your money goes to an escrow agent and your investment is implemented at the direction of the trustee before distributions are made to us. Once the investment is implemented, as an investor, the ultimate source of your payout is the life insurance company. That is why we use “A-rated” and better life insurance companies—we have great confidence that they will be in business and available to make the payout regardless of our company.

I read that the SEC filed a civil action against PWCG. What is the current status of the litigation?

With regard to the SEC litigation, Pacific West has recently secured a significant victory. The SEC asked the court to issue a preliminary injunction that would prevent Pacific West from offering its products to investors during the course of the litigation. This June, the SEC’s request was denied. In doing so, the court found that the SEC did not make the requisite showing that Pacific West’s products were considered securities under federal law, and thus subject to regulation by the SEC. Specifically, the court held that “the SEC has not established the threshold issue of whether Pacific West’s life settlement arrangement constitutes a security under the federal securities laws. As a result, the SEC has not demonstrated likelihood of success on the merits on any of its claims.” Although this ruling does not resolve the SEC litigation, it is a major victory for Pacific West, and we will continue to fight the SEC’s allegations.

Click here for the Press Release, dated June 18, 2015.

Integrity is one of our core values. Our goal has always been to bring our investors quality investments. PWCG has held itself to a high standard of carefully complying with all laws and regulations. We deny the allegations in the SEC’s complaint, and we will vigorously contest the charges. The international law firm, Greenberg Traurig, LLP, has been representing PWCG and will continue to defend PWCG in its litigation with the SEC.  Even while defending against the SEC’s unfounded allegations, we will continue to focus on providing a quality investment product. As you can see in this section and elsewhere on our website, we believe strongly that life settlements are a valuable option for certain investors, and we will continue to provide in-depth information to each current and prospective investor to make thoughtful, informed decisions. We have faith in the American justice system and believe we will be vindicated at the conclusion of the process.

Click here for the SEC’s Press Release & Complaint, dated April 7, 2015.

 

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