Florida toughens regulations on viatical settlements
By Kathy Bushouse
Business Writer
TALLAHASSEE � A bill that changes the way Florida regulates viatical settlements — life insurance payouts in which investors buy a stake and collect when the policyholder dies — is on its way to Gov. Jeb Bush.
Under the bill legislators gave final approval to on Monday, viatical settlements will now be classified as securities, which essentially requires more disclosure by the company selling the product and tougher regulation by the state.
State Chief Financial Officer Tom Gallagher said the move protects investors because licensed securities dealers would determine whether the investment is a good fit with the investor.
Securities laws require such an assessment is made of a potential investor’s net worth, investment experience and other factors “so that you don’t get somebody whose retirement money is put at risk,” Gallagher said.
Should Bush sign the bill into law, Florida would join 46 other states that regulate viatical settlements as securities, Gallagher said.
While investors may be protected, the move could be harmful to those seeking to sell their life insurance policies, either because they can’t afford to make payments and need money or otherwise no longer need the coverage, said Doug Head, executive director of the Orlando-based Viatical and Life Settlements Association of America.
With increased regulation, the number of companies buying life insurance policies to bring to investors will likely decrease, limiting the number of companies with which policyholders can do business.
“I am concerned that we have lost sight � of the literally thousands of Floridians who have benefited from a viatical marketplace, who have been able to sell their policies,” Head said.
The bill’s passage comes almost a year to the day after Fort Lauderdale-based Mutual Benefits Corp. was shut down by federal and state regulators who alleged the viatical settlements company defrauded as many as 29,000 investors. The company has repeatedly denied the allegations, and the case is still pending in federal court.
Life Settlement Pro does not deal with viatical investing or putting together viatical investors. However, if you have questions about any viatical related subjects one of our consultants would be glad to assist you. Please call us toll free at 1-888-973-8377.
