November 29, 2016 Comments (0) Blog, Current Investigations, Publications, Securities Fraud

Investor Alert: Viatical Settlements

(Last Updated On: December 29, 2016)

The White Law Group is investigating the liability that brokerage firms may have for recommending viatical settlements through such companies as GWG Holdings or Life Partners to their customers.

According to the SEC, a viatical settlement allows you to invest in another person’s life insurance policy. With a viatical settlement, you purchase the policy (or part of it) at a price that is less than the death benefit of the policy. When the seller dies, you collect the death benefit.

Your return depends upon the seller’s life expectancy and the actual date he or she dies. If the seller dies before the estimated life expectancy, you may receive a higher return. But if the seller lives longer than expected, your return will be lower. You can even lose part of your principal investment if the person lives long enough so that you have to pay additional premiums to maintain the policy. At one time, most viatical settlements were from people with a life-threatening illness. Now, individuals who are not facing a health crisis may sell their life insurance policies to get cash.

Viatical settlements can be risky investments. For these reasons, you should exercise caution and thoroughly investigate before you consider investing in a viatical settlement.

GWG Holdings Inc. purchases life insurance policies sold in the secondary marketplace. GWG Holdings’ objective is to purchase life insurance policies that will potentially pay more when the policy matures than the cost spent to purchase the policy.

Part of GWG’s sales pitch to investors is allegedly that its bonds are collateralized by the life insurance policies that have been bought by GWG Life Settlements.  These life insurance policies naturally are issued primarily by highly-rated, household name insurance companies.

Life Partners, is the world’s oldest, and one of the most active, companies in the United States engaged in the secondary market for life insurance, according to their website. As we told you (Recovery of Life Settlement Losses) a trio of the company’s executives were facing fraud charges in 2012 from the Securities and Exchange Commission for allegedly failing to disclose that they were underestimating the life expectancies of insured policyholders — a major factor in determining the price of a policy and the amount the firm makes from its sales.

This information is publically available and is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.  The firm represents investors throughout the country in FINRA arbitration claims against their brokerage firm.

For a free consultation with a securities fraud attorney please call 888-637-5510. For more information on The White Law Group, visit www.whitesecuritieslaw.com.