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Can I sell a newly issued policy?

Newly issued policies are referred to as “Wet Paper” and involve life insurance policies less than 2 years old, and thus still in theirs contestable period.

“Wet paper” also sometimes refers to the purchase of life insurance coverage from a life insurance company with the intent of selling the contract to a third party. Whether these new policies should be sold, assigned or transferred is a subject of intense concern. These sales have been encouraged by some life insurance agents and representatives from some viatical companies in order to profit from the transaction.

Very often transactions involving “wet paper” involve misrepresentation or fraud during the policy application process which would render the original policy voidable within the first 2 years, and sometimes long afterwards. At other times they involve questions about the legal “insurable interest” of the applicant for insurance, such as where the person applying for the policy is only a “strawman” fronting for someone who has no legal right to buy the insurance policy.

Thus newly issued policies are often not saleable, as a practical matter. And anyone suggesting that you buy one is likely involved in a fraud.

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