Illinois Viatical Settlement Act of 2009 Update
Some updated tidbits regarding regulation in Illinois.
Senate Bill 2091, signed by Quinn in August, creates the Viatical Settlements Act of 2009, which actually doesn’t take effect until July 1.
One of the bill’s main provisions prohibits what are known as “stranger-originated life insurance transactions,” or STOLI transactions. Such transactions involve a third party encouraging a senior citizen to acquire a life insurance party, then paying the premium on behalf of the senior. The third party ultimately sells the policy to other investors.
“The problems to the buyer could be income tax issues and insurability issues,” he said. “The problems to the insurance companies that are following the rules are that it will quickly deplete their assets over time, and thus, life insurance will be more expensive for those who need it.”
The law also aims to protect state consumers who enter into “viatical settlements,” which the bill defines as the sale of an existing life insurance policy for a cash payment that is less than the full amount of the death benefit in the life insurance policy.
Along with banning STOLI transactions, the law seeks to protect consumers by imposing disclosure requirements and licensing and ethics standards on viatical and life settlement providers.
Look for more info at some of these resources:
Life Settlement License
Life Settlement Tax
Life Settlement Agents
Source: The Telegraph
