The US states of Maine and Washington have set a legal precedent by
enacting laws which compel life insurers to advise senior consumers
about life settlement as an alternative to the lapse or surrender
of a life insurance policy.
Illustrative of the principle adopted by the two states, the law
enacted by Maine requires insurance companies to send seniors
facing the lapse or surrender of their policies a notice advising
them of financial alternatives. This notice must include a brochure
that tells those seniors of their rights as a policy-owner and
describes common products offered by life settlement providers.
Maine’s new law also prohibits insurers from any conduct that
restricts, limits or impairs life settlement transactions.
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“These new laws are terrific developments for senior consumers, and
are expected to be adopted in numerous states,” said Doug Head,
executive director of the Life Insurance Settlement Association
(LISA).
Head went on to launch a scathing attack on insurers that LISA
believe have not been acting in the best interest of many
policyholders.
“These measures respond to the documented evidence of carriers
trying to block life settlements through threats to insurance
agents and providing misleading information to seniors,” Head
added.
LISA recently provided the US Senate’s Special Committee on Aging
with documents detailing insurers’ efforts to impair the secondary
market, including possible anti-competitive conduct.
According to LISA, in Indiana and Kentucky, where legislation
similar to that enacted by Maine and Washington is under
consideration, legislators and regulators are looking into
allegations that certain insurers are actively impairing policy
owners from pursuing life settlements.
Alleged actions by insurers include issuing false information about
life settlements and barring life insurance agents from advising
and assisting policy owners with life settlements.
“It is deplorable when life insurers attack their own customers in
order to maintain their profits,” concluded Head.
