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New Jersey, Pennsylvania lawmakers draft life settlement rules 2010-01-25 The instruments, which let seniors sell their life insurance policies for cash, have become popular among retirees looking for a source of income to pay medical bills or fund home upgrades. Due to the settlements' rising popularity, some states are increasing the consumer protections attached to them. New Jersey's proposal would ban stranger-originated life insurance (STOLI), where an insurance investor convinces an unrelated party to buy a life insurance policy the party doesn't need. The New Jersey proposal would also ban the issuance of life settlements within two years of the date that a life insurance policy was written. Pennsylvania's proposal is similar in that it establishes new consumer protections. But, unlike the Garden State bill, it wouldn't prohibit STOLIs. It would expand the state Insurance Department's regulatory jurisdiction to include STOLIs. And the Pennsylvania proposal would prevent life settlements from being issued for five years after a new life insurance policy is written. Seniors considering a life settlement should consult a life settlement expert to determine if they are eligible.  |
