SOURCE: Life Insurance Settlement Association

Life Insurance Settlement Association

April 16, 2009 19:25 ET

Life Insurance Settlement Association Applauds Washington State: New Life Settlement Law Provides for Informing and Protecting Seniors

ORLANDO, FL--(Marketwire - April 16, 2009) - Washington State has become the first state in the nation to require life insurance companies to advise seniors that a life settlement is an option to the lapse or surrender of their life insurance policies. This strong consumer protection measure was part of a new state law to regulate life settlements in the state, thus protecting the property rights of life insurance policyowners in Washington.

The measure, sponsored by Senator Jean Berkey (Olympia), Chair of the Financial Institutions, Housing & Insurance Committee, was signed into law by Governor Christine Gregoire on Thursday, April 16, 2009. The legislation was supported by the American Council of Life Insurers (ACLI), the National Association of Insurance and Financial Advisors (NAIFA), as well as individual life insurance and life settlement companies.

Washington Insurance Commissioner Mike Kreidler, in a letter encouraging the Governor to sign the bill, cited the notable consumer protection that "[l]ife insurance companies are required to disclose information about life settlements to policyowners, so that consumers are provided fair and reliable information to use when making decisions regarding the disposition of their life insurance policies."

Life settlements pay seniors an average of 300-500% more than the cash surrender value of a policy. Since almost 9 of 10 life insurance policies issued are lapsed or are surrendered, according to a leading international actuarial firm, life settlements are a valuable option for seniors.

As seniors face losses in income and value because of declines in stocks and home prices, many are not able to maintain their life policies. According to Doug Head, Executive Director of Life Insurance Settlement Association (LISA), "This legislation empowers consumers who would otherwise lapse or surrender their valuable life insurance policies."

Other states are considering similar action to require insurers to tell policyowners that a life settlement is an option to the lapse or surrender of their policy. In Indiana and Kentucky, legislators and regulators are looking into allegations that insurers are actively impairing policyowners from pursuing life settlements, including issuing false information about life settlements and barring life agents from advising and assisting policyowners with life settlements.

LISA hopes that Congress and federal regulators will also look into insurers' anti-consumer market conduct and impose a requirement similar to the one found in the Washington legislation which addresses insurers who are harming consumers. According to Mr. Head, "Life insurers are taking taxpayer funds while engaging in self-interested, protectionist conduct which deprives policyowners of their property rights in life insurance. In today's rough economy, consumers, not carriers, should gain the full value of policies."

Established in 1994, the Life Insurance Settlement Association is the oldest and largest trade organization in the industry. Its goal is to promote the development, integrity, and reputation of the life settlement industry, and to promote a competitive market for the people it serves. LISA now represents over 150 members with a wide variety of interests in the industry. For more about the association, visit www.thevoiceoftheindustry.com.

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