Life Insurance Settlement Scams
Families opt for a life insurance policy to provide security against calamities such as death, fire, or accidents. Such deals prove to be a safe way of protecting individuals by agreeing upon a certain amount prefixed by the insurer that would be paid in case of such unfortunate events. Insurance companies assist bereaved families by providing moral, financial, and emotional support. Life insurance is purchased by working employees, and by senior citizens too.
It is possible that a policyholder may not be able to pay the premium fixed due to financial constraints. In this case he would be forced to sell his policies to companies for cash back at a fixed percentage. Some companies may not offer the amount expected by a policyholder. Other companies may agree to pay face value of the policy. An application form has to be filled that includes the medical and policy information to dissolve such a policy and claim compensation.
At times, major companies that invest in buying policies at a lower rate than the purchase value may acquire large sums offered by insurance companies at the time of maturity. Various lenders or brokers, who bid for higher rates, may pay the customers only half the value acquired.
Companies that buy such life insurance settlement policies are major investors who fund many transactions every year for a considerable amount of profit. These policies are held as portfolio assets rather than selling them to outside investors. Such policies are purchased from holders who are in desperate need of money. People may tend to sell their policies to companies without knowing if the company is legally recognized or not.
A policyholder has to consider all such drawbacks and avoid selling them to fraudulent companies who may reap profits over such deals and disappear.
Hence, before selling a policy, individuals are advised to consult lawyers who guide these people. It may prevent them from scams. Selling a life insurance settlement involves a lot of trust in the company. Hence, people need to read the prospect of the companies before taking such a major decision.