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June 21, 2013 at 09:34 AM
A new law that promotes life settlements to pay life healthcare expenses is “credit negative” for the life insurance industry, according to a new report.
Moody’s Investor Service, New York, arrives at this conclusion in “Credit Outlook, a weekly report that examines the credit implications of current events. A section of the June analyses the impact of that encourages the sale of life settlements: the sale of an existing life insurance policy to a third party for more than its contractual cash surrender value, but less than its death benefit.
On June 14, Texas Governor Rick Perry signed into law a bill that lets Texas state Medicaid officials tell policyholders applying for Medicaid assistance that they can sell their contracts to a life settlement company to cover custodial healthcare expenses. Those who do so could receive Medicaid when the settlement funds are used up.
