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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.
Risks
Example: "Zero risk to principal"
There are several risks that may not disclosed by the sales agent. First,
there is the risk that you could lose or tie up your investment dollars
indefinitely if the viatical settlement company and/or the insurance company
becomes insolvent. Second, the policy may lapse if the premiums are not paid.
Third, if the policy is a term life you may lose your investment if the
insured outlives the term of the policy. Fourth, if the policy is within the
two-year contestability period and the insured dies, the insurance company may
deny payment of the death benefits. Fifth, if the insured commits suicide the
insurance company will deny payment of death benefits.
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