The Wisconsin Senate Tuesday unanimously passed a bill requiring life insurance policies to be in force at least 5 years before consumers can sell the policies through a settlement.
The bill, S.B. 513, would change an older law that has permitted consumers to sell policies after holding the policies for 2 years.
The bill, which was sponsored by Sen. Robert Wirch (D.), Chair of the Senate Consumer Protection Committee, also would eliminate minimum payment requirements tied to the life expectancy of an insured, which had been required under the older law.
The law is now being considered by the state Assembly insurance committee. Eileen Mallow, assistant deputy for the Wisconsin insurance commissioner, says she expects the committee to act on the bill within 2 weeks.
The bill is the product of a working group that Wisconsin Insurance Commissioner Sean Dilweg appointed last year to consider changes in the state’s life settlements law. The working group includes representatives from life insurance companies and the life settlement industry as well as from consumer groups, Mallow says.
The bill includes a number of exceptions to the 5-year policy retention rule, Mallow says.
Consumers could sell policies after 2 years if they needed money due to a divorce, medical condition or other change in circumstances, she says.
Doug Head, executive director of the Life Insurance Settlement Association, Orlando, Fla., wrote a letter to the editor of the Journal Times, a Racine, Wis., newspaper, to criticize the bill.
Lehman and other backers of S.B. 513 have been “badly misled” by lobbyists for the insurance industry, Head writes in the letter.
“The legislation prohibits the unfortunate consumers of badly issued policies from finding a way out of their dilemma,” Head writes.