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Some selling life insurance policiesPosted On Mon, October 19, 2009
With people facing financial difficulties, many consumers are turning to selling their life insurance policies as a way to make money.
According to a recent report from ABC News, the practice of "life settlement" is becoming popular among some people. Through life settlement, people sell their life insurance policy to an investor who continues to pay the premiums on the policy. When the person dies, the investor gets the benefits associated with the policy.
"The sooner the insured dies, the more money the investor makes," the report stated.
However, the report also notes that life settlement may be sowing the seeds of another financial crisis. Some investors are taking the insurance policies they have bought and group them together to be resold to other investors. The danger is similar to the subprime crisis, where demand for the insurance policies may create a dangerous market of bad investments.
Furthermore, an increase in demand for life policies could lead to underhanded practices that aim at taking advantage of seniors.
Recently, California adopted new laws regarding life settlement. Now people who are involved in the practice will have to have a license and must complete 15 hours of training. Furthermore, consumers who sell their policy will have 30 days to reconsider after signing, or 15 days after receiving payment, depending on which comes first.
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