The New Faces of Fraud
Most of the following terms were not created until months after going we published “Viatical Settlements: An Investor’s Guide” in 1998. But they were described. Although much of that book is current, it has been replaced with more sophisticated, updated information, “Viatical & Life Settlements: An Investor’s Guide.”
- Clean-sheeting occurs when a person with a life-threatening illness applies for new life insurance and does not disclose the truth about his/her health.
- Dirty-sheeting occurs when a healthy person viaticates a life insurance policy
- The healthy person provides false medical information to indicate that he or she has a life-threatening illness.
- Wet-ink policies
- These are new life insurance policies that are sold immediately after being issued — before the ink is dry.
- These policies were applied for by the insureds who intended to sell them immediately after they were issued.
- The applicants committed fraud on the application by claiming they need life insurance for estate planning purposes, and that a relative would be beneficiary.
- Wet ink is common when healthy seniors are solicited by insurance agents who sign them up for new insurance with the intent to sell these policies. The applicants/insureds do not pay any premiums or are reimbursed for the first premium.
- Life expectancy fraud
- The viatical company informs investors that the life expectancy of an insured is short (i.e., 12 months) when it has data to show that life expectancy may be 60 months or longer.
- Viatical Ponzi scam
- There have been two major fraud cases that were Ponzi scams.
- The so-called viatical company provided false medical and life insurance reports for so-called viators who did not exist.
- No policies were purchased or, in the American Benefit Services/Financial Federated case, a few were purchased after the company realized it was under investigation.
- These were not true viatical companies. They did not provide any benefit to people who were terminally ill. They used the funds they collected from investors to buy luxuries for themselves.
- Premium Financed (SOLI, IOLI, SPIN-LIFE)–the insured is issued a new life insurance policy but never pays a premium. In recent years, these insureds are seniors. Read Warning to Seniors.
For a list of some companies accused of defrauding insureds and/or investors, click HERE.