The amount stated in your estimate is less than the amount I will receive if I keep getting my monthly retirement. Could you explain how you reached that amount?

The current lump sum value of your monthly pension is figured (discounted) considering the Time Value of Money (TVM), in the same way a mortgage, which is paid over time, is figured. With a mortgage you can pay several times the original loan amount by the time the loan has been paid off. Our program figures an estimated return on the lump sum investment and that is how Veterans First arrived at the estimate you received.

Is the Lump Sum taxed?

Due to the nature and form of the assignment of income, the lump sum is not taxable; however, your income from your pension remains taxable as it is now.

How do you get the money from my retirement, do you take it out of my checking account or by allotment, etc.?

The monthly amount determined in the final contract is paid through direct deposit.

Could you explain the insurance policy requirements?

Due to the nature of the assignment, VFFS, Inc. must have an insurance policy on all program participants that is sufficient to cover the total of the monthly payments due from them over the duration of the assignment. Our insurance associates can address the requirements in greater detail during the underwriting process if you should have any additional questions.

I have applied for the lump sum payment through VFFS, Inc. I have not heard form your insurance representative; however, I was contacted by an insurance company last Friday and completed a telephone interview.

In order to expedite the process our insurance representatives have been processing the paperwork and forwarding it directly to the Insurance Companies. We are finding that this takes several days out of the process and speeds things up for our applicants.

Once all the lab work and insurance is underwritten, what else do we need to do?

Once the insurance has been issued our closing attorney will contact you to schedule a closing. If there are any additional requirements we will let you know at that time.

Because your company is a financial services company, are we expected to invest through your company once the money is available?

VFFS, Inc. is a specialized financial services company. We do not offer investment services as you refer to them, so you are under no obligation to invest through us.

Who pays for the life insurance?

The first annual premium of the Life Insurance policy is the responsibility of the program participant and is deducted from the Lump sum at funding. All other annual payments due during the term of the contract are paid by VFFS, Inc.

Why is the insurance policy worth more than I will receive?

The policy amount is designed to correspond with the total of the monthly payments. This is not a loan but rather an assignment of future cash flow. VFFS, Inc. is purchasing the monthly cash flow and does not want early payments, so the insurance allows VFFS, Inc to maintain the cash flows throughout the term of the contract. It is important to note however that any amounts above those monthly remaining payments necessary to satisfy the contract between the retiree and VFFS, Inc. will go directly to the beneficiary as you may designate. Upon completion of the contract you can choose to keep the policy, which may be of benefit to you, or you may choose to simply let it lapse.

Are you a member of the Better Business Bureau?

VFFS, Inc is a member of the BBB in Tidewater VA and also a member of the Hampton Roads Chamber of Commerce

Why does the Naval Fleet Reserve not endorse these types of transactions?

There have been some less than scrupulous companies that have taken advantage of retirees in the past. These companies have purchased retirement pay from military retirees at extremely high rates of return to the company, sometimes as high as 45%-50% or more annualized return. These companies pay as little as 25 cents on the dollar to get those huge returns. By comparison, the returns on investment that VFFS, Inc. uses to calculate lump sum payments ranges from 12.5% to 16% on average, which is far more favorable to the retired veterans. As a precaution, I would imagine that the Reserve office is advising you to be wary of companies that are charging ridiculously high rates of return on their investments.

Once the procedure is approved, how long does it take before money is exchanged?

Time to close is running approximately 12-16 weeks from the date of application. This includes both financial and insurance underwritings.

Exactly what percentage of my retirement would I get?

This is up to you and depends on the amount you choose to assign. VFFS, Inc.'s monthly receipt is fixed at the outset and remains constant for the duration of the contract. Our minimum lump sum payment is currently $50,000 although we can consider lesser lump sum amounts on a case by case basis.

How many years does this plan involve?

The contract calls for a ten year commitment from the participants.

Your lump sum payment offer was in the amount of $55,500.00, over a ten year period. I would like you to break that down to an actual monthly repayment plan for a ten year period indicating your 13.5% interest. I would like to see how it breaks out, and what advantage there actually is based upon your calculations.

A loan at 13.5% for ten years would carry a monthly repayment of approximately 850+/-. As this is an assignment and not a loan there is no option for early repayment and thus a monthly breakdown or amortization chart would be moot. The contract between you and VFFS, Inc would be for a specific monthly amount over 120 Months. Life insurance must be placed on all program participants. In the event that the participant dies, the insurance would be used to make the remaining payments with any balance above the payments still owed going to any beneficiary you designate.

The Lump Sum amount you receive may differ as a result of life insurance expenses, past and present credit issues, etc. As far as the advantage is concerned I suggest you look at your current monthly expenses that you would eliminate with the lump sum, and determine how long it would take you to pay off those things with the same monthly payment. Other things to consider are anticipated returns on investments you might make in your own business or other items that positively impact your future or the future of your family.

Only you can determine if the opportunity is worth the cost. Our program is unique and offers retired veterans an opportunity not available anywhere else at this low cost.

How is the payback set up?

A Direct Deposit account is established to receive your Monthly retirement pay. The fixed amount due to VFFS, inc under the assignment contract is paid directly to VFFS, Inc and any residual amounts are paid to you. As the years progress there will generally be increases in your pay through COLA's etc. Those amounts will also be paid to you as the monthly assigned amount is fixed at the time of closing.

Is there insurance to pay off if I die?

We require an insurance policy equal to the amount of the monthly payments. The first annual premium is deducted from the funding amount and VFFS will pay the premium on the policy for the remaining ten years. If anything happens to you during the contract term VFFS will collect an amount equal to the remaining payments on your contract and remit the balance to the beneficiaries you designate at the inception of the assignment. In some cases the participant may have insurance sufficient to cover the obligation and providing that policy is acceptable to VFFS it can be assigned to VFFS for the required term. Under no circumstances will VFFS allow an existing policy to be assigned if that is the only coverage in place to cover the participants’ family, etc.

If approved by you and acceptable to me, how long does the process take?

From the time we receive your complete application the process can take from 3-6 weeks+/- depending primarily on the Insurance underwriting portion.

Are there any upfront fees or costs?

There are fees but none upfront. At closing there is an application processing and underwriting fee payable to Veterans First of 2.5% of the lump sum amount and there is an attorney’s fee for document preparation and closing of $500.00. These amounts are deducted from the Lump sum amount paid. The only other expense is the first annual Life Insurance premium which is deducted from the Lump Sum Payment. All other premiums are paid by VFFS, Inc

Do you offer a shorter term program?

We only offer a 120 payment program.

What about the COLA and other increases in my retired pay during the assignment period? I contacted another company that keeps the increases. Do you do that?

The contract with our company sets a fixed monthly amount. This allows you to know exactly what your commitment is for the entire term. I believe the company you spoke with may take an assignment of your entire retirement check for the entire term. If that is the case, it would mean they would receive all increases in your paycheck until the end of the contracted term. As your retirement account increases you could reasonably expect your net pay to grow substantially over the duration of your commitment. It hardly seems reasonable to give that increase to someone who has neither earned nor paid for the right to receive it. To avoid this we set the monthly amount at the beginning and it stays fixed for the duration of the contract. We receive a fixed amount and all additional amounts are remitted to you.

Why do I have to qualify for life insurance?

Life insurance is required. As you are probably aware, your payments from your retirement would end in the event of your death. To prevent any interruption in the payments and to secure VFFS' interest in those payments, VFFS, Inc will maintain an insurance policy equal to the total amount of the payments. If something should happen to you during the contract period VFFS would collect the remaining unpaid payments from the policy and all additional proceeds would be remitted to your estate or the beneficiaries you designate at the beginning of the contract. The first annual payment on the insurance policy is deducted from the lump sum payment you receive; all payments thereafter are made by VFFS, Inc.

My credit has suffered recently and my score is probably not that great. Will this eliminate me from qualification?

While your past credit history is important, your credit score is less relevant than your evidencing your ability to continue to meet your monthly obligations without the monthly income you have assigned. Job history, stability and past payment practices are all considered. We will not close an account with anyone who does not show us that they will be in a substantially better position by participating in our program than they would be without it.

You mentioned insurance. How does that work? For instance, if I only live 7 years, do you recover the money left on the next 3 years or is it a policy for life insurance based on a set amount?

The insurance amount is based on the total of the 120 monthly payments over the entire term of the contract. If, as in your example, you only live seven years into the contract (84 Months) then the insurance would cover the remaining 36 months still owed to VFFS, Inc and the balance of the insurance would go to your beneficiary or your estate as you designate at the beginning of the contract. VFFS, Inc is only interested in collecting the amount it contracts and pays for, nothing more and nothing less. We have two agents who work with us. If you have acceptable insurance to secure the amount contracted for they will guide you in the paperwork that must accompany the policy at closing. It is always preferable, however, to have a new policy underwritten just for the purpose of securing that the payments will be covered.