Senators Raise Concern Over Loosening Insurable Interest Laws
Two members of the Senate Finance Committee have raised concerns about legislation being considered in various states that may weaken state insurable interest laws to the point they will no longer serve any meaningful purpose.
In a letter to American Council of Life Insurers President Frank Keating, Sens. Gordon H. Smith, R-Oregon, and Kent Conrad, D-N.D., say the state legislation that concerns them is designed to facilitate marketing programs through which charitable, educational and religious institutions work with third-party investors to solicit individuals to participate in investments.
The charitable institution would assist third-party investors in purchasing life insurance policies on the individual from one insurer and also obtain annuity contracts on the same individual from another insurer, they say. The income generated from the annuity could be used to pay the life insurance premiums, they continue.