Life Settlements Not Same as Viaticals

As a licensed life settlement company, we applaud and fully support recent efforts to inform California consumers about companies that attempt to defraud consumers through the investment in certain life insurance transactions known as viatical settlements [“Lawmakers Probe Viatical Fraud,” Feb. 27].

However, there is an important distinction to be made between life settlement companies that purchase senior citizens’ unwanted or unneeded life insurance policies with institutional funds, and the sale of interests in viatical settlements to individual investors.

The sale of unsecured interests to individual investors nationwide has left many credulous individuals holding hundreds of millions of dollars in policy investments that are far from predictable. These investments have proved to be extremely risky and may violate state securities laws.

The viatical industry began as a way for terminally ill patients who owned life insurance policies and had a life expectancy of two years or less to sell those policies and receive money to pay medical bills from investors who purchase a share in their death benefits.

Conversely, a similar vehicle, known as a life settlement, can provide senior citizens with an option of selling their no longer wanted or needed life insurance policies and to receive money to meet their changing needs.

Life settlements are purchased by licensed life settlement companies with financing provided by world-recognized banks and insurance companies, all subject to appropriate regulatory oversight. We commend all efforts to help consumers and their advisors to understand this legitimate and sophisticated financial planning tool.

Paul J. Moe

Chairman and CEO

Living Benefits

Financial Services

Minnetonka, Minn.