Life settlements in Texas are not as regulated like other states. The phrase life settlement is not mentioned in the Texas Securities Act. This means each case of fraudulent activity has to be examined individually.
In general, life settlements in Texas work like in any other state. A policy owner decides they no longer need the insurance. Then a broker or agent helps the owner find a potential buyer for the policy by shopping the policy with all possible buyers. Once the buyer makes an offer the policyholder accepts, they sign all of the contracts and the ownership of the policy is transferred to the buyer.
Life settlements in Texas have received more attention nationally then other states because there were several well known cases of fraud that involved life settlements. These cases were typically involving investors in these of life settlements losing their money because they invested in a ponzi like scheme.
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