Members of the Kentucky state Senate voted Wednesday to pass a life settlement bill, House Bill 414, 38-0.
The Senate considered the bill under a streamlined “consent order” process.
Members of the state House approved the bill March 14 by a 91-0 vote.
State Rep. Robert Damron, D-Nicholasville, Ky., is the lead sponsor. Damron is a former president of the National Conference of Insurance Legislators.
The bill would let a consumer exchange a life insurance policy with a death benefit over $10,000 for a life settlement contract that would be used to pay for long-term care (LTC) services.
The life settlement provider would have to hold the proceeds from the settlement contract in an irrevocable state-insured or federally insured account for the benefit of the recipient of the LTC services.
The care recipient would be the only person who could select the care provider.
The provider would have to set aside a small part of the death benefit to cover the LTC recipient’s funeral costs and other final-expense costs.
The provider would have to maintain either a $500,000 surety bond or $500,000 in errors and omissions insurance, and it would have to file any contract forms and advertising materials with the Kentucky Department of Insurance.
The recipient would have to use the settlement contract money to pay for LTC services by tapping state or federal money, but the state would not include the life settlement contract proceeds when determining whether the recipient was eligible for Medicaid.
Any claims against the provider would be limited to an amount based on the policy death benefit. The maximum size of a claim would be equal to what was left over from the death benefit after subtracting the amount the provider paid for the policy, the amount the provider paid for premiums to keep the policy in force, and “other reasonable costs or expenses,” according to the bill text.