The debate about whether policyholders should have to wait 5 years or just 2 years to sell life insurance policies is just one of the topics likely to surface at the spring meeting of the National Conference of Insurance Legislators.
Members of NCOIL, Troy, N.Y., are planning to start a 4-day meeting Thursday in Savannah, Ga.
State insurance legislators who belong to NCOIL are working on amendments to a life settlement model act.
The American Council of Life Insurers, Washington, has been supporting a proposal that would require policyholders to hold policies for 5 years unless they had experienced major life changes.
Other groups supporting the 5-year rule include the Association for Advanced Life Underwriting, Falls Church, Va.; the National Association of Insurance and Financial Advisors, Falls Church.; and the National Association of Independent Life Brokerage Agencies, Fairfax, Va.
The exceptions to the 5-year rule would include provisions exempting insureds who are terminally or chronically ill and insureds who are divorced or widowed from the original policy owner.
The trade groups’ recommendations largely follow language in a current draft of amendments to the Viatical Settlements model act that will be considered during the spring meeting of the National Association of Insurance Commissioners, Kansas City, Mo., during a meeting set to start March 9.
The life and producer group suggestions also would allow insureds to sell after just 2 years in cases where policy premiums are funded “exclusively with unencumbered assets, including an interest in the life insurance policy being financed only to the extent of its net cash surrender value, provided by, or fully recourse liability incurred by, the insured or a person…” and if “there is no agreement or understanding with any other person to guarantee any such liability or to purchase, or stand ready to purchase, the policy, including through an assumption or forgiveness of the loan.”