Corporate & Securities Law

While the life insurance settlement industry is booming, it may be at the expense of investors not knowing what exactly they are purchasing.  Life insurance settlement transactions are unusual investments, typically only suitable for high net worth investors who can afford to take a gamble.

The transactions are typically structured where investors purchase a fractional interest in a life insurance policy held by a third party, wagering that the insured will die before the policy matures - in which case the investor will collect the death benefits offered by the policy.  Life settlement companies often promise investors a tidy 10-15% return on their investment.

The key to this investment is correctly estimating the life expectancy of the insured.  If the insured lives too long, investors not only fail to collect on the death benefits offered by the policy, but also are obligated to continue to pay the premiums on the insurance policy as long as the person is alive.  And to the detriment of the investors, the insured often outlives the policy.  A recent sample taken from one of the life insurance settlement industry?s leading companies showed that the insured had outlived the policy in over 95% of the policies it issued.  Moreover, 65% had lived at least double their estimated life expectancy, and 35% lived three times longer than their estimated life expectancy.  Those are material facts that every investor should be told before they invest.

Investors in life insurance settlement transactions therefore often fail to achieve the returns they were promised and indeed are saddled with paying premiums on a life insurance policy for an uncertain period of time. 

If you invested without knowing the facts and/or have lost money investing, you may have legal recourse. Contact Jim Eccleston at Eccleston Law Offices at 312-332-0000 to discuss your case.