Matthew Wilkes Hit with Customer Complaints over Premium-Financed Life Insurance Policies
According to FINRA’s publicly available records, Matthew Wilkes, a stockbroker formerly associated with Raymond James Financial Services Inc., stands accused of making unsuitable recommendations regarding premium-financed life insurance policies, failing to disclose material risks, and recommending an unsuitable change in insurance providers. Consequently, two customer complaints are currently pending, seeking total damages of more than $6.8 million.
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What is Life Insurance Premium Financing?
Life insurance premium financing involves taking out a third-party loan to pay for a policy’s premiums. As with other loans, the lender charges interest, and the borrower (in this case, the insured) repays the loan in regular installments until the debt is satisfied or the insured passes away.
The Risks of Life Insurance Premium Financing
There are several risks associated with life insurance premium financing. First, there is a risk that policy performance may not meet expectations, leading to lower cash value. Additionally, interest rate changes can affect policy performance and loan balance relative to collateral value. It is crucial to ensure the lender is credible and will exist throughout the plan duration. If additional collateral may be required if policy performance is poor, or if the loan can be called.
Systematic risks, like market volatility, affect the overall investments underlying the policy and are unpredictable. In the event of default, lenders may pursue and attach liens to other assets to collect on the policy loan. This is because policy loans are typically secured by valuable assets and are not non-recourse. Additionally, variable interest rates can increase the overall cost, adding to the potential risks. It is crucial to understand and manage these risks when considering a premium financing loan.
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At Meyer Wilson, we believe every investor deserves transparency, ethical conduct, and sound financial guidance. These allegations serve as a stark reminder of the importance of due diligence and vigilance when entrusting your financial future to professionals. If you have concerns about your investments or suspect any improper conduct, do not hesitate to seek assistance. Our team of experienced professionals is here to help you navigate the complexities of the financial industry and ensure your rights are protected. Investor protection is at the core of our mission.
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Written By: Courtney Werning
Recovering Losses Caused by Investment Misconduct.