The National Conference of Insurance Legislators (NCOIL) wants life policyholders to be told about a variety of alternatives to letting a policy lapse – including life settlements.
Members of NCOIL, Troy, N.Y., decided at the group’s annual meeting in Austin, Texas, approved the Life Insurance Consumer Disclosure Model Act.
The model, based on an existing Kentucky law, would require that policyholders be told about 8 possible options for dealing with difficulties with paying for a life policy, including accelerated death benefits, conversion to long term care, and selling the policy benefits to a life settlement company.
A policyholder would have to be warned that not all options might be available, and the policyholder would be advised to contact a financial advisor, insurance agent, broker or attorney to get more information.
Kentucky state Rep. Robert Damron, D-Nicholasville, Ky., the NCOIL president, helped the sponsor, Kentucky state Rep. Ron Crimm, R-Louisville, Ky., get the model approved.
“It is imperative that policyholders understand that they have alternatives to merely lapsing or surrendering their policy,” Damron says in a statement about the model.
The American Council of Life Insurers (ACLI), Washington, opposes the model.
“The NCOIL model, which takes a one size fits all approach, will cause further confusion to consumers on what to do with their life insurance policies as we believe that consumers are better served when they can consult with a financial planner or agent,” the ACLI says in a statement.