Washington Gov. Christine Gregoire (D.) has signed a new law to regulate life insurance settlements in the state.

The law, SB 5195, is based mainly on model legislation developed by the National Conference of Insurance Legislators, Rochester, N.Y.

Among other provisions, the law requires life insurers to notify insureds age 60 and up who are seriously or terminally ill that they have alternatives to giving up or cashing in their policy.

The bill also specifies that life insurance policy owners may not enter a settlement agreement within 2 years of receiving their policy. It also requires that policies settled within 5 years of issuance be reported to the state Office of the Insurance Commissioner.

“This is an excellent bill,” stated Doug Head, executive director of the Life Insurance Settlement Association, Orlando, Fla. “This is a first in the nation with mandated disclosure by insurers of the settlement option.”