The Washington State Securities Division has issued an alert emphasizing that only licensed securities salespeople or broker-dealers can sell investments in life settlements.

Selling securities without a license is subject to criminal prosecution, division officials say.

Insured individuals use life settlement contracts to sell their policies.

In Washington, a security exists when an arrangement represents an investment of money in a common enterprise with the expectation of profits resulting primarily from the efforts of others. A life settlement investment often fits that definition, according to the division, which is part of the state’s Department of Financial Institutions.

Even if a salesperson is licensed to sell securities in Washington, the salesperson needs to check to make sure that the life settlement investments in question have been approved for sale by the broker-dealer the salesperson represents, officials say.

“Selling away,” or selling securities off the books of the broker-dealer, could result in disciplinary action by the broker-dealer and suspension or revocation of the salesperson’s license, officials warn.