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.
“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.