A panel discussion here was billed as a point/counterpoint on life settlements. But the 2 panelists decided to take a different direction.
They decided they would explore 3 approaches to defining stranger-originated life insurance transactions, which both panelists and audience concurred are not settlements and should be banned.
The intent was to highlight key reasons why supporters believe states should use one definition over the other in statutes barring STOLI transactions. They also aimed to air some points of contention these definitions bring up.
What happened was a type of point/counterpoint, after all. The two panelists disagreed with one another, and some members of the audience kicked in their own points, too.
This occurred during the 6th annual life insurance conference of LIMRA International, LOMA, Society of Actuaries and American Counsel of Life Insurers.
Michael Lovendusky, vice president and associate general counsel with American Council of Life Insurers, Washington, D.C., presented a definition from the National Association of Insurance Commissioners Viatical Settlement Model Act. He covered how NAIC defines STOLI characteristics, and mentioned that it would prohibit settlements with certain characteristics for a five-year period after policy purchase.
“The NAIC definition doesn’t outlaw any transaction,” he stressed. “It just makes you wait 5 years” before settling.
Douglas Head, executive vice president of the Life Insurance Settlement Association, Orlando, Fla., said repeatedly that LISA believes the NAIC definition casts too wide a net, risking the blocking of transactions that are legitimate settlements. He also questioned the meaning of specific phrases and terms in the NAIC definition.