Offering Industry: Life Insurance Settlements

Sector: Life Settlements

Minimum investment: $10,000

Offering Type: Prospectus

Security Type: Preferred Stock

Offering Amount (Max): $150,000,000

Offering Amount (Min.): N/A

Offering Price: $1,000 per unit

Targeted Dividend: 7% preferred annual dividend (paid monthly)

Exit Strategy/Liquidity: Limited Liquidity, no active market. After 3 years redemption at stated value1.

 

1 Stated value is the original investment amount. For Years 0 to 1, Redemption Fee 12%; Years 1 to 2, 10%; Years 2 to 3, 8% and Years Thereafter, No Fee

INVESTOR MATERIALS

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OVERVIEW

GWG Holdings, Inc (GWGH: NASDAQ), through its subsidiaries (“GWG”), specializes in acquiring life insurance policies in the secondary market from seniors (“policyholders”) who no longer want or need their policies.  GWG’s strategy is to own the policies they purchase until their maturity with a goal to generate returns greater than the costs needed to purchase and finance those policies. When GWG purchases policies in the secondary market they provide:

  • Options for consumers beyond lapsing or surrendering their life insurance for its cash value.
  • Diversification opportunity to invest in assets uncorrelated to the traditional equities, commodities, or real estate.

GWG, has been purchasing life insurance policies in the secondary market since 2006, evaluating over 39,000 life insurance policies and purchasing over $1.95 billion in life insurance policy benefits.

Benefits for policyholders and Investors

The secondary market for life insurance provides options to policyholders who own life insurance policies when they no longer want or need the policy coverage. Here’s how:

  • Policies are purchased at a discount to the face value of the insurance benefit but more than their surrender value.
  • Policyholders sell their life insurance policies in the secondary market with the help of a life settlement broker, or if they choose, directly to life settlement providers. This regulated process is called a “life settlement”, and may provide the seller with greater cash value than would be received if they were to surrender the policy or let the policy lapse. The policy seller can then use the proceeds to pay immediate expenses, make their day-to-day life more comfortable, or take their dream vacation.
  • The purchasing company (GWG Life) continues to pay the premiums in order to collect the full-face value of the life insurance policy benefit upon maturity.
  • By acquiring life insurance policies in the secondary market, GWG intends to continue building a diversified portfolio of life insurance policies.

Additional GWG Advantages

GWG’s investments in the secondary market for life insurance may deliver advantages versus other traditional investments. Here’s why:

  • The performance of life insurance policies is not correlated to traditional, investments assets such as real estate, equity markets, fixed income markets, currency, or commodities.
  • Each life insurance policy is unique and not linked to any other life insurance policy. In addition, the life insurance policies within the portfolio are diversified demographically by age, gender and life expectancy.

GWG is offering up to $150 million of Series 2 Redeemable Preferred Stock to purchase common stock. Holders of Series 2 Redeemable Preferred Stock are entitled to receive, when, and as authorized by our board of directors, cumulative cash dividends on each share of Series A Preferred Stock at an annual rate of 7%.  All commissions, fees and expenses relating to the offering will be paid by GWG. Each share of Series 2 Redeemable Preferred Stock has an initial stated value of $1,000 per share, and may be partially converted into common stock at a conversion price equal to the volume-weighted average price of the common stock for the 20 trading days prior to the date of conversion (discounted, based on the number of years your preferred stock has been held, as described below), subject, however, to a minimum conversion price of $12.75 per common share, and a maximum of 10% of the stated value of the preferred shares being convertible (i.e., a maximum of approximately 7.84 common shares for each share of converted preferred stock), subject to equitable adjustment.

An investment in the securities described herein involves risks and other considerations, including the ones described below. Before you invest, you should read the prospectus and other documents that GWG Holdings, Inc. (“GWG”) filed with the Securities and Exchange Commission (“SEC”) for more complete information about GWG and the risks and other considerations relating to the securities described herein. Any terms of securities described herein represent a general overview of certain selected terms and are qualified in their entirety by reference to the prospectus and other documents that GWG filed with the SEC.

THIS IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN. AN OFFERING IS MADE ONLY BY THE PROSPECTUS. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS.

LEGAL NOTICE THE OFFERING STATEMENT FOR THIS OFFERING HAS NOT YET BEEN QUALIFIED BY THE SECURITIES AND EXCHANGE COMMISSION UNLESS OTHERWISE INDICATED ABOVE. ACCORDINGLY, NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED, AND IF SENT, WILL NOT BE ACCEPTED. NO SALES WILL BE MADE OR COMMITMENTS TO PURCHASE ACCEPTED UNTIL THE OFFERING STATEMENT RELATING TO THIS OFFERING HAS BEEN QUALIFIED BY THE SECURITIES AND EXCHANGE COMMISSION. A PROSPECTIVE PURCHASER’S INDICATION OF INTEREST IS NON-BINDING.