More Life Settlement Legislation
Again, a majority of this recent rise in life settlement regulation and legislation is due to rise in STOLI policies and “wet paper life settlements”. Here is an excerpt from the article:
At least 20 states are considering legislation dealing with the life settlement industry and STOLI. This session, two bills have been introduced in Minnesota.
HF3534, sponsored by Rep. Kate Knuth (DFL-New Brighton), calls for a five-year period between the time a life insurance policy is issued and the time any type of life settlement agreement could be reached. The bill is based on the Viatical Settlements Model Act of the National Association of Insurance Commissioners. It awaits action by the House Commerce and Labor Committee.
“A life insurance policy that is just made for someone else dying as an investment is bad,” Knuth said. “The people who need a life insurance policy, and those who buy and sell them, no one wants it to get out of hand. The question is: How do we decide to regulate?”
A companion bill, SF3063, sponsored by Sen. Linda Scheid (DFL-Brooklyn Park), awaits action by the the Senate Commerce and Consumer Protection Committee.
Another bill takes a slightly different tact. HF3878, sponsored by Rep. Leon Lillie (DFL-North St. Paul), also focuses on restrictions to STOLI practices, but does not have the five-year waiting period. The bill adopts language supported by the National Conference of Insurance Legislators. It, too, awaits action by the House Commerce and Labor Committee.
“It’s hard to think of life insurance like a house, or as a product or property that someone might own, but it is.” And with the bill that he has introduced, “you would be able to cash out if you want to.”
Though he is still learning about many of the issues involved, Lillie agrees that the STOLI problems need to be addressed, even though the consumer issue is just as important. “If you own something, you should be able to sell it.”
A companion bill, SF3495, sponsored by Sen. Dan Sparks (DFL-Austin), awaits action by the the Senate Commerce and Consumer Protection Committee.
Source: Craig Green, Session Weekly
Full Life Settlement Article: A roll of the dice
