The Life Settlement Institute Reaffirmed Its Pro-Consumer and Pro-Competition Efforts

The Life Settlement Institute (LSI), the leading organization representing secondary market providers for life insurance, reaffirmed today its pro-consumer and pro-competition efforts to regulate life settlements.

LSI has been the leading organization in promoting and supporting strong regulation of the life settlement market and in promoting best practices within the industry. LSI and its members have successfully advocated for the passage of every state settlement law adopted since 2001, all of which are based on the model laws of the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislators (NCOIL).

Today, 27 states regulate life settlements and require licensing, and establish clear roles and responsibilities, of life settlement providers and brokers, that protect life insurance policyowners who are considering a life settlement. Each of the state settlement laws contains strong consumer protections and anti-fraud measures, including required consumer disclosures, privacy protection, and the requirement that providers and brokers report suspected fraud to insurance regulators. In 2006, LSI successfully lobbied for a new law in Maryland that requires (i) all compensation arrangements to be disclosed in life settlement transactions and (ii) all offers to purchase life insurance policies from life settlement companies to be furnished to the owner of the policy. In New York, LSI has advocated for three years for the passage of legislation that would have required licensing of life settlement providers and brokers and included a clear disclosure requirement to policyowners that a settlement broker represents the policyowner and owes a duty to the policyowner to act according to the policyowner’s instructions. LSI supports similar measures as those advanced in Maryland and New York in the model laws currently under consideration by the NAIC and NCOIL.

A life settlement is the sale of an unwanted or unneeded life insurance policy to a third party for more than its cash surrender value, but less than its net death benefit. Consumers are increasingly aware of and choose to benefit from the secondary market for life insurance. Payments from life settlements are generally three to four times more than the cash surrender of a life insurance policy. In the past five years, policy owners—including seniors, family trusts and businesses—have received more than $2 billion dollars above the cash surrender value of their policies through life settlements.

ABOUT LSI

The Life Settlement Institute is a trade association dedicated to: increasing the knowledge and awareness on the part of financial planning professionals and advisors of the life settlement industry, increasing the awareness of life insurance policyholders of the option of obtaining more value (where appropriate) for their policy than otherwise would be available from the issuing life insurance carrier, promoting the use of institutional financing in the life settlement industry, supporting laws and regulations that foster the use of such institutional financing and preventing fraudulent or dishonest life settlement transactions.

Source: Life Settlement Institute