Policy Statement: Fractionalized Interests

The mission of the Life Insurance Settlement Association (LISA) is to advance the highest standards of practice and professional development for the industry, and to educate consumers and advisors about a life settlement as an alternative to lapse or surrender of a life insurance policy.  LISA strongly supports the secondary market for life insurance as the source of an asset class that provides investors with excellent non-correlated returns.

Since its founding, LISA members have expressed concerns about the fractionalization and selling of multiple interests in the ownership of a life insurance policy because it creates an investment structure with unique and complex risks that are not easily understood by most investors. In addition, investment offerings of fractionalized interests in life insurance policies may be inconsistent with respect to representations about the safety and performance of such investments, and/or may fail to adequately disclose all of the risks associated with these investments.

Accordingly, LISA reaffirms its position that the purchase of fractionalized interests in a single life insurance policy is an inappropriate investment for most if not all investors. LISA advises that any party considering an investment in a fractionalized interest in a life insurance policy should have financial and legal professionals carefully review both the terms of the offering and its sponsor in order to make a fully informed investment decision.

April 30, 2014

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