Securities Division
Arizona Corporation Commission
1300 W. Washington, 3rd Floor
Phoenix, AZ 85007
Phone: 602-542-4242
Toll Free: 1-866-VERIFY-9
E-mail: info@azinvestor.gov
Web site: www.azinvestor.gov
Viatical or Life
Settlements
As
March 2003 Investments
Questions to Ask:
1. Is this investment registered with
the state? If not, why?
2. How is the investment return
calculated? Is it a fixed or an annual
return?
3. Will I ever be responsible for
paying the premiums of the policy?
4. When does the contestable
period of the policy end?
5. When is the principal and
return on my investment paid?
6. Who will monitor the status of
the policy and the insured?
7. What are the potential risks?
8. What fees or costs, if any,
am I responsible for paying?
ARIZONA
CORPORATION
COMMISSION
SECURITIES DIVISION
Viatical or life settlements allow life
insurance policyholders to “cash out” of
their policies while they are still alive.
Investors pay for the right to receive the
future death benefits by purchasing an
interest in the policies, usually through a
viatical company.
Viatical settlements concern terminally ill
individuals while life settlements concern
people who simply wish to sell their life
insurance policies for the immediate cash
benefit.
Investing in viaticals is not similar to
buying certificates of deposits. Viaticals
have risks you need to consider before
you buy. The Arizona Corporation
Commission’s Securities Division warns
investors to fully investigate before they
invest. This pamphlet will provide you
with the basic framework for making an
informed decision.
What Investors Must Know
¨ Viatical settlements are not liquid
investments. You receive a return only
when the insured dies. In some cases,
you may cancel your investment within
seven calendar days of the purchase.
¨ The rate of return is not guaranteed.
The return depends on when the insured
dies, which is very unpredictable. Medical
advances can further complicate the
accuracy of the prediction.
¨ The death benefit may not be paid. The
insurer may not pay the death benefit if
premiums have not been paid or the policy
was obtained fraudulently. To prevent a
policy from lapsing, you may be responsi-ble
for the premiums.
Other Considerations
¨ Funds invested in viaticals may not be
eligible for an IRA, 401(k), or Keogh
plans. Your investment may also have tax
consequences. Consult with your financial
professional.
¨ Understand who is estimating the life
expectancy of the insured and if that person
has the experience and ability to do so.
Viatical or
Life Settlements
as Investments Arizona Investor Rights
A viatical company should disclose the
following:
¨ The contact information for the issuing
insurance company.
¨ The total value of the policy and your
percentage of ownership.
¨ The terms and costs for converting a
group policy to an individual one.
¨ The contact information for the party
responsible for renewing a term policy.
¨ The date when you may have to pay
premiums, if necessary.
Investigate Before You Invest!
¨ Contact the Securities Division to obtain
registration and disciplinary information
about salespeople and viatical companies.
Ask for the Investigator on Duty at 602-
542-4242, toll- free 1-877-811-3878.
¨ Remember, viatical settlements are
complex investments. Consult with a
trusted third party to determine if such an
investment is right for you.
