The Wall Street Journal reports that agents trying to sell what is known as life insurance notes are getting into legal trouble. Life insurance notes or funds were introduced by firms who would buy life insurance policies from individuals, pay the premiums, and then pool them together with other policies. These were then sold as notes or funds to investors. Investors would get paid off when the insured individual died. In essence, their death benefits become an investor's payoff.
The controversial product never took off because of the macabre nature of it. Regulators didn't like the product and legislators felt it went against public policy because it allowed investors to profit from death.
As a result, life insurance agents who were aggressive in their sales are now facing lawsuits. According to the Wall Street Journal, there are several hundred civil lawsuits filed against agents by insurers.
One such case right now has Deutsche Bank suing two agents for selling them non-existent policies. The lawsuit against agents Razmik Khachatourians and Tigran Khrlobian accuses them of breaches of contract and fraud. The pair have also been criminally charged. Both agents have pleaded not guilty in their criminal case and deny the claims in the civil lawsuit.
While life insurance is a useful estate planning tool, it is one that is best discussed with a NY estate attorney. An informed consumer knows that learning about the different types of life insurance, getting the best rate, and choosing an insurance salesperson are important. If you have questions about life insurance, call a New York estate planning lawyer to learn more about it.
Related Resources:
- How to Buy Life Insurance (FindLaw)
- Call A New York Estate Planning Lawyer (FindLaw)
- Stranger Originated Life Insurance Policies Questioned (FindLaw's New York Estate Planning News Blog)
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