My apology for not making it clearer.
At closing, the cash going to seller is to give him the money necessary to make the premiums on the life expectancy on whom the policy is written.
There is no more cash after 7 years. The first policy my best client acquired paid off in about 9 months. The death benefit is a set amount that does not change.
In this formula, the seller is giving up interest on the money he could have earned. The million dollars does not grow. But if this were an asset that was not used personally, was costing money to own, and was not easy to sell, it may give him the benefits he needs to make the deal. If he needs the money from this property to acquire another, this scenario will not work for him. It will work in a very small percentage of transactions, but I posted this to give FReepers a creative idea for which they may someday find use. :)
Yes, I will earn a fee and those things are negotiated with the principals. In the exchange market, it is typical to be paid by the client you represent. In this case, I represent the interest of the client with the LSPs.
Thanks for your excellent reply. I was trying to imagine all of the gears and incentives to all of the parties that make this type of deal possible. Now I get it
: )
I find it fascinating that people are able to conceive and complete deals like this, with a positive outcome for all involved. It’s a necessary and efficient use of capital and resources.
It’s also a shame that people who don’t understand capital (or are jealous of it) try to prevent people like you (and Wall St.) from doing business.
Good for you, I hope you have many more such deals.