What should I know about fraudulent life insurance policies and viatical settlements?

The viatical settlement went out of business in Vermont. Elizabeth R. Costle, the Vermont Commissioner of Banking, Insurance, Securities, and Health Care
Administration ordered Florida-based Mutual Benefits Corporation (MBC) to desist and cease viatical settlements in Vermont. This was claimed on June 6, 2001.

The largest viatical settlement company in the United States, MBC, purchases life insurance policies from the ill who need money for health care.

They then resell interest in those policies to investors who later pay policyholders a portion of the face value. The final step in the process is that they take the full benefit when the policyholder dies.

According to Blythe McLaughin, deputy commissioner of securities in Vermont claims that even though this practice might not have hurt Vermont investors they didn't fairly disclose this information to the public. Therefore, they went on to profit from these clean-sheeted insurance policies. That's one of the main reasons for the desist and cease order.

Here are the major key points about fraudulent life insurance policies and viatical settlements:

• Life insurance usually can't be bought by those who are terminally ill. Therefore, life insurers can lose a lot of money when policyholders pass away shortly after receiving their policies. 

• If life insurance companies do not discover fraudulent applications within the first two years of the policy, life insurance companies can lose out on that, as well. By reporting fraudulent applications, life insurers do this during the contestability period.

• When life insurance policies are bought fraudulently and turned into viaticals, viatical investors can reap profits at the expense of insurers.

If, for any reason, you still don't understand the relationship of fraudulent life insurance policies and viatical settlements, don't hesitate to do more research on the internet, ask a pal or, the best and most common option, and call your insurance agent in order to clarify any problems that might have been caused due to this uncertainty.

Steven Steiner, vice president of MBC, claims, "For the past five years, we have fought to rid this industry of individuals who have broken the law and have taken advantage of the terminally ill and private investors who have purchased their life insurance policies.'