A viatical settlement bill that unanimously passed the North Dakota Senate received a state House hearing March 6 that drew testimony from industry representatives.
The bill, SB 2268, is one of similar anticipated actions in a number of states, including Illinois and New York, according to Bruce Ferguson, senior vice president, state relations, for the American Council of Life Insurers, Washington. Louisiana, New York and Utah have already issued bulletins addressing life settlements, he added.
In testimony before the Industry, Business and Labor Committee of the North Dakota House, Frank Keating, president and chief executive of the ACLI, argued that the value of a human life should not be reduced to the status of a commodity auctioned off in the futures market.
Insureds may be unaware that once a contract is settled, insurance may not be available if there is a future need because the insured’s policy capacity is used up, Keating said.
He also pointed out that settlements might put the tax benefit of life insurance at risk. He explained that the U.S. Senate Finance Committee recently called on ACLI to discuss revenue implications of life settlements. Although the focus seemed to be on investors, the committee could come perilously close to considering a tax on the product, Keating argued.