Life settlement regulation exists in 42 states. This means that over 90% of the population is protected through consumer protection legislation.
The goal of this legislation is to ensure that all parties involved in a life settlement transaction conduct themselves in a professional, ethical manner. Further, most states require that individuals are informed of their life settlement choice in a clear, straightforward manner.
Clear communication about the life settlement option translates into consumers being informed of the life settlement option as well as other options they may have with their policy. This information allows them to make informed decisions regarding their unneeded life insurance policy.
Further, this also requires life settlement providers and life settlement brokers be licensed in their respective states, much like a real estate agent is.
Many states require that life settlement companies ensure their clients are protected from fraud. Legislation requires that companies take a proactive stance in this regard and make sure that the policies being bought and sold are in fact legitimate policies.
More current legislation
The past few years have seen a few changes in regard to the life settlement industry. As of 2010, the Life Insurance Consumer Disclosure Model Act mandated that seniors who own a policy that is about to lapse be informed in writing of all of their options, include the life settlement option. This Act helps ensure that seniors make informed financial decisions.
In 2012, commissioners in each state reported a total of two complaints in the life settlement industry. Both of these were addressed and closed. This is in stark contrast to the life insurance carriers, who accumulated approximately 8,000 complaints in 2014. This means that thus far, consumers are very pleased with the life settlement industry.
Several state leaders have introduced laws that would require seniors with a life insurance policy to be informed of the life settlement option as a solution to pay for long-term care.
These measures that have been carried out over the past decade or so have strived to inform seniors of their options with their life insurance policy that they no longer need. In the past, seniors and their families have been relatively uninformed about the life settlement option.
Unfortunately, many have chosen to allow their policy to lapse or surrendered the policy back to the insurance company when this may not have been the most lucrative option. Although these may be viable options for some, seniors should be fully aware of all of their options with the unneeded policy before making a decision.
If you or someone you care for has a life insurance policy that is no longer needed, contact us today