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Common misrepresentations and omissions
As a prospective investor, you are entitled to a full disclosure of all
material facts regarding the investment. Therefore, you should be aware of
common misrepresentations and omissions made by sales agents when they solicit
prospective investors.
Other Risk Factors
Financial statements
Sales agents sometimes fail to disclose the financial statements of the
viatical settlement providers. However, this information is material and helpful
in determining the provider's solvency.
Pending litigation and/or regulatory action
If applicable, this information should be disclosed because any event that
may affect the provider's solvency or ability to do business is material.
Commissions
Sales agents almost always receive compensation for their sales efforts.
Under state securities laws, as a prospective investor, you are entitled to know
what portion of your investment goes towards commissions and other selling
costs.
Premiums
Some sales agents may not disclose whose responsibility it is to pay the
premiums on the policy. In most cases, a percentage of your investment is set
aside in a premium reserve account and an escrow company pays the premiums using
the account. You should determine who has the responsibility to pay the premiums
if the original premium reserve account becomes depleted.
Tracking
Sales agents sometimes do not disclose who has the responsibility of tracking
the health status of the insured, obtaining a death certificate upon the
insured's demise, and filing a death benefits claim with the insurance
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