Thursday, February 8, 2007
NASD issued a warning to seniors about the potential pitfalls of selling their existing life insurance polices for cash in transactions known as "life settlements" or "senior settlements."
"Life settlements are not for everyone," said NASD Chairman and CEO Mary Schapiro. "While they can be a valuable source of liquidity for people who no longer want or need their current policies, life settlements can have high transaction costs and can have negative consequences for your financial situation. And it is very difficult to determine whether you're getting a fair price for your policy. The best advice is to proceed with caution."
Because only variable insurance products are securities, NASD only has jurisdiction over life settlements involving variable policies.