Insurable Interest Concerns Mobilize Industry Groups
The life insurance industry is stepping up its efforts to combat the growth of investor-owned life insurance products by creating an industry task force whose goal is to examine practices that neutralize the purpose of insurable interest laws.
The industrys concern is that proliferation of these practices may prompt the federal government to end or create a ceiling on inside buildup within life insurance, as a result reducing the attractiveness of the product to consumers, especially to high-net-worth individuals.
The task force was created by the National Association of Insurance and Financial Advisors, the Association for Advanced Life Underwriting, and the American Council of Life Insurers.
They said they have been working together for over a year to lobby against the expansion of state insurable interest laws that would facilitate so-called “investor-owned life insurance.” IOLI involves charitable organizations and permits third-party investors to acquire interests in life insurance policies that they would otherwise be prohibited from acquiring directly.
But now, they said, the proliferation has become more pronounced through other arrangements that bypass state insurable interest laws that govern the purchase and ownership of life insurance.