Male   Female
  • Risk associated with investing in life settlements
  • April 13, 2010
  • life settlements risksBy Karla Sullivan

    Life settlements often benefit both parties involved. Sellers are relieved from monthly premium payments – and at much more favorable prices than their insurer would offer.

    The buyer receives a return based on how much longer the insured individual lives. A recent report by the Wall Street Journal indicated the fraud risk inherent in this investment, as doctors, policyholders and settlements providers and brokers may deceive buyers.

    “Among the reasons a life insurance policy could be declared invalid: The insured lied about his health on the application, or obtained the policy with the intention of selling it in a life settlement,” the report said.

    If the policyholder exceeds his or her life expectancy, investors are also responsible for paying premiums. The risk is smaller for those buying into a pool of life settlements, according to the report, because a significant number of individuals would have to exceed their life expectancies before overall rates rise.

    This, however, puts investors at the mercy of their peers: If one investor neglects to pay premiums, expenses for all the others go up.

    Many critics of life settlements dislike the idea of benefiting from another person’s death. They are also significantly more expensive than many other investment opportunities available to individuals.

  • Category: Life Insurance, Spending

Leave a Reply



Consumer Insurance Guide SM provides a wide selection of originally-authored articles and expert advice targeted to the self-directed insurance shopper. Our mission is to provide consumers with useful, money-saving information on all things having to do with making sound insurance purchase decisions.

Consumer Insurance Guide SM is owned by Life Quotes, Inc. 8205 South Cass Avenue, Darien, IL. For editorial, content feeds, advertising and lead purchase opportunities, contact Robert Bland at

Originally founded in 1984 as Quotesmith Corporation, Life Quotes, Inc. owns and operates and, two online consumer insurance information services that cater to the needs of self-directed personal and corporate insurance shoppers.

About Us  |   Contact Us  |   Press Releases  |   The Best Privacy Policy  |   Life Insurance  |   Careers
For Agents & Brokers  |   Site Map  |  

Copyright ©1984-2015 Life Quotes, Inc., 8205 South Cass Avenue, Suite 102, Darien, Illinois. Life Quotes, Inc. and certain of its personnel are licensed as insurance agents, brokers or producers in all states. CA agent #0A13858, LA agent #200696, MA agent #333509159. dba Life Quotes Insurance Services in CA under agent #0827712, in LA under agent #205078. dba Life Quotes Insurance Services, Inc. in UT under agent #90093. All rights reserved. Telephone (630) 515-0170. Founded 1984.