If you buy someone else’s insurance policy, in a senior life settlement, you’ll also want a sponsor who can avoid the pitfalls of these deals. The policies should be at least two years old, when purchased, so that the insurance company can’t contest the payoff.
In addition, the sponsor should get statements saying that the former policyholder was competent, when making the sale, or that an authorized agent acted on the policyholder’s behalf. Beneficiaries also must sign statements waiving any rights to policy benefits. Moreover, the sponsor should have ample reserves to keep the policy in force, until the insured individual dies.
Most important, though, you must invest with a sponsor who is trustworthy. A dishonest promoter always will find a way to cheat you, if that’s his intention. Therefore, you should ask the sponsor for referrals from reputable associates and other investors, and check them out before writing any checks.
