Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Life Insurance

Pennsylvania Gets Tougher Viatical Settlements Law

Your article was successfully shared with the contacts you provided.


On July 10, Pennsylvania Governor Mark Schweiker signed into law the Viatical Settlements Act, which provides for the regulation of viatical and life settlements by the Pennsylvania Insurance Department.

Among its measures are anti-fraud provisions such as “mandatory reporting of fraudulent viatical settlement acts to the PID,” as well as, “a prohibition against knowingly entering into a viatical settlement contract for a life insurance policy that was obtained by means of a false, deceptive or misleading application.”

The new law will help safeguard against fraud by regulating both viatical brokers and providers, says Rosanne Placey, press secretary with the Pennsylvania department.

Brokers and providers will now be required to be licensed by the state in order to engage in the business of viatical settlements.

Viatical settlement brokers, acting as fiduciaries for the ill or aging “viators,” shop the life insurance policies to viatical settlement providers, who then collect and pool the policies for the purpose of selling them to investors.

The viatical settlements market, now referred to as the life settlements market, has evolved since the 1980s when it served terminally ill persons, most notably AIDS patients. The market allowed these insureds to raise immediate cash by selling the future proceeds of a life insurance policy for a lump sum of money.

Today, companies like Coventry First LLC of Fort Washington, Pa., do not limit life settlements to the terminally or chronically ill. The practice has grown increasingly popular among the elderly who no longer need or can no longer afford their current life insurance policies.

“With a viatical or life settlement, seniors can access and use their life insurance policies proactively as a new source of wealth,” says Doug Head, executive director of the Viatical and Life Settlements Association of America, Orlando, Fla.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.