I the life settlement database fraud prevention or a privacy breach?

The creation of a national viatical settlement database similar to the one used by health and life insurers to prevent fraud will be explored by the Life Settlement Institute (LSI). However, critics wonder whether such a database will compromise privacy or catch crooks.

According to LSI, a nonprofit association mad up of six privately-geld viatical settlement companies, the database will house information that will aid viatical companies and "support professionals as well as government regulators in tracking fraudulent or suspicious behavior.'

The LSI will contend the following:

• Brokers who have engaged in questionable behavior

• Other professionals (financial advisers, doctors, etc...)

• Sellers or insured who have fraudulently represented their medical conditions (lied on applications)

Sue Blevins, president of Institute for Health Freedom, a nonprofit Washington D.C., think tank claims, "The concern is that the information contained in the database may be used for purposes other than preventing fraud, such as to sell you insurance or a loan. There would have to be some kind of disclosure and consent involving all the parties.'

The "ultimate' database will comply with all applicable federal and state laws, according to LSI President David M. Lewis. He claims that the government anti-fraud initiatives will "be created in such a way as to safeguard the dissemination of personal and private information.'

The topic of whether or not the life settlement database prevents fraud or privacy breach, is a topic that can probably be debated. Many claim that this database will store information securely and prevent it from getting into the wrong hands. However, what if this information really does get into the wrong hands?

There are shady insurers out there who will have access to the information many people thought was confidential. For a quick review, here is what a life or a viatical settlement is:

• A life or viatical settlement is the sale of a life insurance policy to a third party. After it is sold, the owner of the policy sells the policy for a percentage of the death benefit.