Electronic copy available at: http://ssrn.com/abstract=1669558
THE FUTURE OF DEATH FUTURES: WHYVIATICAL SETTLEMENTS MUST BECLASSIFIED AS SECURITIES
Miriam Albert
Pace Law Review, Vol. 19, No. 3, Spring 1999This paper can be downloaded without charge from theSocial Science Research Network Electronic Paper Collection at:http://ssrn.com/abstract=1669558
Electronic copy available at: http://ssrn.com/abstract=1669558
PACE
LAW
REVIEW
.
The
Futureof
DeathFutures:
Why
Viatical
Settlements
Must
.
Be
Classified
as
Securities
Miriam R. Albert
VOLUME
19
SPRING
1999
NUMBER
3
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The Future of Death Futures: Why Viatical Settlements Must Be Classified as Securities
Albert, Miriam, "The Future of Death Futures: Why Viatical Settlements Must Be Classified as Securities" (August 31, 2010). Pace Law Review, Vol. 19, No. 3, 1999.
Viatical settlements are a form of asset-backed security where a…
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Albert, Miriam, "The Future of Death Futures: Why Viatical Settlements Must Be Classified as Securities" (August 31, 2010). Pace Law Review, Vol. 19, No. 3, 1999.
Viatical settlements are a form of asset-backed security where a terminally-ill policyholder, known as a viator, sells the right to receive the proceeds of his or her life insurance policy to an investor. During his or her lifetime, the policyholder is paid an estimation of the present value of the death benefits under the policy. Viatical settlements are legal and serve a benevolent purpose. However, beyond the altruism of providing funds to the terminally ill, and the legalities of simply selling the right to receive life insurance proceeds to someone other than the insured, viatical settlements pose other legal and ethical issues. Because viatical settlements have not yet been classified as investment contracts, and thus securities for purposes of the federal securities laws, investors in viatical settlements must gather information themselves on which to base their investment decisions. Furthermore, investors are denied the protections and remedies provided by the federal securities laws, and have only a common law fraud remedy to redress misleading statements or omissions by viatical settlement firms. The specter of conflicts of interest, confidentiality problems, and the serious threat of fraud looms over the viatical settlement industry, and in the absence of appropriate regulation, threatens the very stability of this compassionate and increasingly popular financial innovation.
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