(8) INVESTMENTS IN POLICIES

From time to time, we purchase interests in policies to hold for investment purposes. ASC 325-30, Investments in Insurance Contracts, provides that a purchaser may elect to account for its investments in life settlement contracts based on the initial investment at the purchase price plus all initial direct costs. Continuing costs (e.g., policy premiums, statutory interest, and direct external costs, if any) to keep the policy in force are capitalized. We have historically elected to use the investment method, and refer to the recorded amount as the carrying value of the policies.

The table below describes the Investments in Policies account at May 31, 2013.

Policies With Remaining Life Expectancy (in years)	Number of Life Settlement Contracts		Carrying Value		Face Value
0-1		1	$	3,506	$	18,182
1-2		-		-		-
2-3		14		686,247		969,345
3-4		4		45,117		227,992
4-5		8		71,413		134,883
Thereafter		137		1,500,574		5,108,487
Total		164	$	2,306,857	$	6,458,889

We evaluate the carrying value of our investments in owned policies on a regular basis, and adjust our total basis in the policies using new or updated information that affects our assumptions about remaining life expectancy, credit worthiness of the policy issuer, funds needed to maintain the asset until maturity, capitalization rates and potential return. We recognize impairment on individual policies if the expected discounted cash flows are less than the carrying amount of the investment, plus anticipated undiscounted future premiums and capitalizable direct external costs, if any. Impairment of policies is generally caused by the insured significantly exceeding the estimate of the original life expectancy, which causes the original policy costs and projected future premiums to exceed the estimated maturity value. We recorded $11,968 and $671,918 of impairment for the First Quarter of this year and last year, respectively. The fair value of the impaired policies at May 31, 2013, and February 28, 2013, was $23,944 and $46,110, respectively.

Estimated premiums to be paid for each of the five succeeding fiscal years to keep the life settlement contracts in force as of May 31, 2013, are as follows.

Year 1	$	224,778
Year 2		250,953
Year 3		304,665
Year 4		276,456
Year 5		251,734
Thereafter		1,833,501
Total estimated premiums	$	3,142,087

The majority of our Investments in Policies was purchased as part of settlement agreements and purchases from existing clients, which we refer to as tertiary purchases. We do not currently have a strategy of buying large amounts of policies for investment purposes, but we expect to continue to make purchases as they may be presented to us and if the purchases can be made with benefit to both parties. Since the purchases for our own account are motivated by settlements and tertiary purchases, the supply of available policies in the secondary market does not affect our purchases. The risks that we might experience as a result of investing in policies are unknown remaining life expectancy, a change in credit worthiness of the policy issuer, funds needed to maintain the asset until maturity and changes in discount rates.

At May 31, 2013, we held Investments in Policies of $2,306,857, net of impairment, which is classified as a current asset as we anticipate selling the policy interests within the next twelve months.