The National Conference of Insurance Legislators has released a new Life Settlements Model Act draft.
Members of NCOIL, Troy, N.Y., say they will wait to talk to insurance and securities regulators before tackling some sections of the draft.
NCOIL has deferred completion of work on definitions for terms such as “broker,” “life settlement investment agent” and “purchaser.”
NCOIL also has deferred completion of a section concerning the parameters that should govern the actions of a life settlement investment agent and a section concerning what, in the solicitation of sale of a purchase agreement, would be considered fraudulent and unlawful.
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Members of the team that developed the latest model draft say they accepted several suggestions for amendments that came from state Sen. James Seward, R-Milford, N.Y.
Seward recommended that the model:
- Prohibit a person or trust from directly or indirectly marketing, advertising or soliciting the purchase of a policy with the sole goal of settling it.
- Prohibit the use of the words ‘free’ or ‘no cost’ in any marketing or advertising.
- State that at no time prior or for any period up to 2 years following the issuance of the policy should a person enter into an agreement to settle a policy. But that suggested provision would create exceptions for policyholders who suffer from terminal or chronic illness, and it also would create exceptions for policyholders who bought coverage when they owned stakes in closely held corporations and later arranged to dispose of their ownership interests.