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Legal Notice


NY Public Awareness
NY Public Awareness

The general public of the State of New York should be aware of the cost and frequency of fraudulent activities and the methods of preventing fraud in the life settlement industry.

As with any financial transaction, an owner of an in-force life insurance policy and the insured person under such policy must be careful not to be the victim of fraud or to commit fraud in connection with a life settlement.  Unfortunately, fraud occurs in the life settlement industry and costs all life insurance consumers money, whether directly or indirectly.

The exact cost and frequency of fraudulent activities are not known.  As the Coalition of Insurance Fraud states on their website at,  “Measuring insurance fraud is an elusive target.”  The Coalition Against Insurance Fraud is one of the most trusted and credible insurance anti-fraud organizations in the country.  Since its founding in 1993, the Coalition Against Insurance Fraud has worked effectively to enact tough anti-fraud laws and regulations, educate the public about insurance fraud and serve as a national clearing house for fraud information.

A life settlement is a transaction involving the sale of an in-force life insurance policy for less than the current death benefit to an entity licensed by the State of New York to purchase such a policy, known as a “Life Settlement Provider”.   The Life Settlement Provider or its designees and/or assigns obtains all of the ownership and beneficial rights to the life insurance policy, pays all future premiums and collects the death benefit when the insured dies.  The owner of the life insurance policy may be represented by a licensed “Life Settlement Broker” to negotiate the best transaction terms for them or may go directly to a Life Settlement Provider to sell their policy. You should check with the New York State Department of Financial Services to be sure that the Life Settlement Provider and the Life Settlement Broker, if any, are licensed in the State of New York to provide such services.  A licensed Life Settlement Provider must have the documents used to purchase a policy approved by the New York Department of Financial Services and must give the disclosures required by New York law to the owner and insured of the policy that is the subject of the life settlement contract.

The life settlement transaction was meant to provide a market for the sale of in-force life insurance policies that are no longer needed or wanted by the original owner of such policy, usually because of changed circumstances.  Perhaps all children have been educated, there are no longer estate tax concerns, premiums become unaffordable or enough other life insurance coverage is in place.

A brochure entitled “New York Consumer Information Brochure” giving you more information about life settlements is available on this website for viewing and download.

You should know that any person who knowingly presents false information with the intent to defraud on an application for life insurance or on an application for a life settlement is guilty of a crime and may be subject to fines and criminal prosecution.  This includes information about the health status of the insured and the financial status of the applicant.

New York requires, as do most states, that an “insurable interest” exists between the person insured and the person initiating the purchase of a life insurance policy.  In New York, an insurable interest exists between close family members who are related by blood or law or when the proposed owner of the policy has a substantial economic interest in the continued well-being of the person being insured.  So, be wary of any life insurance agent/producer trying to sell you a life insurance policy and you are told that you do not have to pay premiums, or would not be liable to someone else who paid premiums or are paid money upfront to be the insured under a policy.  The foregoing are possible indications that the contemplated transaction is “Stranger Originated Life Insurance” (“STOLI”) which is not legal in the State of New York.

If you feel that you are a possible victim of life insurance fraud or otherwise suspect life insurance fraud, contact the New York State Department of Financial Services Insurance Frauds Bureau at 1-888-FRAUDNY or


Lisa New York Public Awareness

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