Viatical and Life Settlements Consumer Information: What is Viatical Fraud?
What is Viatical Fraud?
Although most of the following terms were not created until months after going to press with "Viatical Settlements: An Investor's Guide," they are described in the text.
Clean-sheeting
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
Dirty-sheeting occurs when a healthy person viaticates a life insurance policy and provides false medical information to indicate he/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. They were purchased for the purpose of selling them, but insurers were told on the application that the purpose was estate planning. 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 more recent viatical Ponzi, a few were purchased after the company realized it was under investigation.
There are other types of viatical fraud, such as billing investors for premiums after the viator's death; not notifying investors about a death; not paying death benefits to investors for as much as a year after the viator's demise; etc.
Source: Viatical-Expert
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