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Gallagher Orders Viatical Company to Halt Doing Business in Florida

2/5/2001

TALLAHASSEE – State Treasurer and Insurance Commissioner Tom Gallagher today issued an order banning Accelerated Benefits Corporation from purchasing or selling viaticals in Florida. The Orlando company was engaged in purchasing life insurance policies from policyholders who lied about their HIV status to obtain them and then concealing the fraudulently obtained policies from insurance companies.

"This pattern of viatical fraud puts both consumers and investors at risk, many of whom are senior citizens who invest their life savings in these policies," Gallagher said. "Any company or individual that engages in these deceptive practices will be shut down."

Department regulators found that Accelerated Benefits Corporation bought 11 fraudulently obtained policies through numerous brokers. In some cases, the company helped hide the fraud from insurance companies that issued the policies to men who lied about their HIV status.

In six of the 11 policies purchased, an employee of Accelerated Benefits Corporation paid the policy premiums from a personal checking account to hide the fact that a sale had already been entered into prior to the expiration of the contestability period, regulators said.

Under the order, the company's license, issued in October 1997, and its eligibility for licensure as a viatical settlement provider has been revoked. Click here for a copy of the order (requires Adobe Acrobat Reader).

Viatical providers and brokers buy life insurance policies, usually from the terminally ill, and resell them to investors who make money upon the insured's death. By selling a policy for a percentage of its face value, the insured gets cash up front for medical, living or other expenses. The tradeoff is giving up a bigger payoff at death for one's beneficiaries. Viatical settlement providers then arrange for investors to fund the purchase, pay the premiums and become the beneficiaries.

Consumers considering investing in a viatical product or seeking information about selling their own life insurance policy, can obtain a brochure on viatical settlements by calling the Department of Insurance toll-free helpline at 1-800-342-2762 or visiting our Web site at http://www.fldfs.com/Consumers/Guides/guides.htm.