TAX INFORMATION

• The following is provided for informational purposes only.

• Please be advised that some companies do not provide tax advice.

• The taxation of a viatical settlement may vary on a state by state basis.

• Advice from a professional tax advisor is recommended.

Effective January 1, 1997:

The Health Insurance Portability and Accountability Act of 1996 makes the proceeds of Viatical Settlements TAX-FREE on the Federal level for individuals who are terminally or chronically ill.

Terminally ill - defined as being diagnosed by a certified physician to have a life expectancy of under 24 months.

Chronically ill - defined as being permanently and severely disabled by an illness.

Also, most states have declared that payments of viatical settlements are exempt from state taxes. However, some states do not give these payments tax-free status. Because of the complexity of the situation, it is advised that you seek professional tax advice.

The Health Insurance Portability and Accountability Act of 1996

• HIPAA - Complete Copy of Act

• HIPAA - Accelerated Death Benefit / Viatical Settlement section only

Receipt of payment under a viatical settlement may affect your eligibility for public assistance programs, such as medical assistance (Medicaid), aid to families with dependent children, supplementary social security income, and AIDS drug assistance programs; and it also may be taxable and subject to claims of your creditors. Before applying for a viatical settlement, you should consult with the appropriate social services agency concerning how receipt could affect your eligibility and that of your spouse or dependents; and because of the potential tax consequences, please consult with a tax advisor.

Entering into a life insurance settlement contract may cause other rights or benefits such as disability waiver of premium benefits that may exist to be forfeited by the owner; assistance should be sought from a financial advisor before pursuing and completing this transaction.

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