Life Settlements Regulation: Much Accomplished – More Ahead

This year has been witness to continuing state interest in defining and regulating the life settlement regulatory requirements. Many states, which had initially taken steps in prior years, strengthened existing requirements. Others adopted new provisions based on industry models available to them. Among the states with activity this year are Arkansas, California, Georgia, Idaho, Maine, Minnesota, Nevada, New York, North Dakota, Oregon, Tennessee, Utah, Vermont, and Washington. Generally referring to the sale of a life insurance policy by a policy owner to third party investor, life settlements can be an appropriate financial option for seniors in situations such as high premiums that are no longer affordable due to changes in their life circumstances. Selling the policy, or the right to receive the death benefit, to another party may certainly be preferable to surrendering the policy for a cash value calculated at an amount less than otherwise available. What has been addressed by many of the states are policyholder disclosures, licensing requirements, and reporting provisions. With over half the states currently with requirements in place, as well as increased media attention on the life settlements industry, the upcoming year should see a continuing focus in the legislative sessions.