April 26, 2011, 08:00:00AM. By Brenda Craig

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Dallas, TX: Waco-based financial company Life Partners did not play fair with investors and is guilty of both breach of contract and breach of fiduciary duty, according to a class-action suit filed by Dallas attorney James Craig Orr from the firm of Heygood, Orr & Pearson. If the allegations prove true, hundreds of people who bought something called "life settlements" investments from the company are likely owed thousands and thousands of dollars.

Life settlements, as explained on the Life Partners Web site, are investment vehicles that "allow people to turn unwanted life insurance policies into cash."

Essentially, life settlements are investments whereby a policyholder sells his or her life insurance to someone else for immediate cash. The new owner agrees to pay the premiums, and when the original owner dies, they collect the full value of the policy.

Although the Securities and Exchange Commission recently suggested life settlements need to be more clearly defined to protect consumers, life settlements are increasingly popular and perfectly legal financial instruments.

However, in the suit against Life Partners, based in Waco, Texas, investors who bought fractional amounts of "universal life insurance policies," a kind of life settlement that builds in value over time, allege they were asked to pay higher than necessary premiums on their investments.

As a result, the money in the escrow account set aside by Life Partners to cover the costs was depleted.

"Every other life settlement company that I am aware of only has their customers pay the minimum amount necessary to keep the policy from lapsing," says Orr, "but Life Partners has been paying the whole plan premium. Why we don't know. We are going find out in this lawsuit."


Jim Craig Orr is a partner in the firm of Heygood, Orr & Pearson. His practice focuses on complex business litigation and catastrophic personal injury cases. He has taken more than 70 cases to trial and achieved substantial financial recoveries for his clients. He is a graduate of the University of Michigan Law School.

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