Life settlement investing – Can an investor invest directly in one insured’s policy? Insurable interest in a policy is very important these days, not only to the insured, but to the life insurance company. Life insurance companies are now very sensitive to settlements and do not want policies bought and sold with the idea of making money and life settlement investing. They want to insure the client because of the need to pay estate taxes, replace income to the family, pay a partnership interest and such. They frown on insurance activities for the sole purpose of life settlement investing. It is not in their best interests and curtails activity due to greed and other unethical considerations.
With that said, an individual can certainly sell his/her policy due to changing conditions where he needs money due to lifestyle changes resulting from income needs not being met. The client will take his policy to an agency specializing in those transactions, they will perform their due diligence and make sure the transaction is right for the client, and maybe an individual investor who happens to be in the loop, can have the opportunity to purchase the policy.
The investor in this case will be subject to accepted pricing models as he would with an institution and he will be subject to a contestable period of two years if the policy is less than that time, the policy will still end up being purchased by an institution when the time comes.
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