Settlements Back From the Dead!

It is my understanding that a security license is not necessary to engage in the sale of a non FINRA product. Each state has its own regulations so before forward check with your state insurance department. Thanks your interest.
 
Be very careful, the sale of life settlements as an investment, in the state of Illinois and several other states are considered selling an unregistered security which puts you in violation of the securities act of 1958. If your client loses their money and you are convicted of violating this act, you will be forced to pay 100% of your client's loss back to them, not mention a fine! There is a company called Life Partners out of Waco, Tx that tells you that they have a supreme court ruling that says life settlements are not securities, however some states have their own private rulings. I would write your own state's securities exchange and get it in writing as to what their opinion of this transaction is. Better to be informed than sorry later!

If you are doing nothing more that finding a client and helping them sell their policy and receiving a commission for helping them do so, that is different. However, I would still contact your state for their opinion.
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Just a note for policy replacement, Most companies ask a question on the app if your client has done a life settlement or if they have had discussion about doing a life settlement in the future. Don't lie on the app, it will come back to bite you! If a client has done a life settlement, most companies will not issue a new policy for 5 years.
 
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It's not a security since it has no inherent market risk and isn't affected by int rates etc...

There are three branches of life settlements that agents can look at and get the appropriate licensing for:

1) Selling a life settlement investment product (either fractionals or raising money for a fund). --- Most states consider this a security and requires a Series 7. Some fractionals dispute this, but are having legal issues due to it. If you want to raise money - just get a 7 and not worry about it!

2) Brokering UL, Term, WL policies to life settlement provider - many states require agents to hold a life settlement brokers licences, even if you are using a life settlement broker. The state requirement follows the state that the policy is held in.

3) Brokering VUL policies to life settlement providers. This is considered a security and requires a Series 7 if you want to get paid a commission. If a life settlement broker tells you otherwise, you are violating SEC regulations and risk future penalties.
 
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