Viatical Settlements
I have a client that purchased a life insurance policy on a non related third party on the advice of her ex investment advisor. Now the company is in receivership and the policy is now requiring $5,000 premium payments in order for the policy to stay in force. This whole thing smells of impropriety. What are your thoughts and what recourse does my client have?
Permalink Submitted by Alan Spross on Thu, 2007-08-23 00:29
My thoughts? I guess, how many years of negative news regarding viaticals has to be released before both investors and professionals get the picture? So far this has been going on for over a decade.
There have been several class actions against both sales agents and companies offering viaticals, so the first step is to determine what is going on relative to the specific sources of her investment, and if no class actions, the prospects of filing individual suits. Problem here is that before any of this gets resolved, she will have to make a decision about the premiums due. If she does not pay, does she still have a paid up value or not? She should also get as much documentation together as she can muster to see if there has been any misrepresentation in the materials she was given. Most of these were for aids patients, who for various reasons including effective medication, far outlived early mortality projections.
Another thought is to sell the policy if there is a secondary market left. I am not up to speed on the tax ramifications of various options.