The viatical settlements industry has been regulated by the Federal Government since the 1990s. The Viatical Settlements Act of 2009 was enacted to provide additional protections to consumers who are considering the sale of their life insurance policies. In this article, we will provide an overview of the Viatical Settlements Act of 2009 and its impact on viatical settlements.
Background:
A viatical settlement is a transaction in which the policyholder sells their life insurance policy to a third party for a lump sum payment that is less than the death benefit of the policy. This type of settlement is usually entered into by policyholders who have a serious illness or are facing financial hardship. The Viatical Settlements Act of 2009 was enacted to provide additional protections for consumers who are considering selling their life insurance policies.
Key Provisions of the Viatical Settlements Act of 2009:
- Definition of Viatical Settlements: The Act defines a viatical settlement as a transfer of ownership of a life insurance policy for consideration that is less than the death benefit of the policy.
- Licensing Requirements: The Act requires that all viatical settlement providers and brokers be licensed by the appropriate state insurance department. This ensures that only qualified and experienced professionals are involved in viatical settlements transactions.
- Disclosure Requirements: The Act requires viatical settlement providers and brokers to provide policyholders with detailed disclosure information about the viatical settlement process, including the terms and conditions of the transaction and the policyholder’s right to cancel the transaction.
- Prohibited Transactions: The Act prohibits certain types of transactions, including the sale of life insurance policies to unlicensed entities and the sale of life insurance policies to policyholders who are not terminally or chronically ill.
- Consumer Protections: The Act provides additional consumer protections, including the right to cancel the transaction within a specified period of time and the right to receive a full refund of any consideration paid.
Impact of the Viatical Settlements Act of 2009:
The Viatical Settlements Act of 2009 has had a positive impact on the viatical settlements industry by providing additional protections to consumers and ensuring that only qualified and experienced professionals are involved in viatical settlements transactions. As a result of the Act, viatical settlements have become a more transparent and regulated process, providing consumers with greater peace of mind when considering the sale of their life insurance policies.
Conclusion:
The Viatical Settlements Act of 2009 has been instrumental in providing additional protections to consumers who are considering the sale of their life insurance policies. By requiring licensing, disclosure, and prohibiting certain transactions, the Act has helped to ensure that viatical settlements are a safe and secure option for policyholders who are facing financial hardship or have a serious illness. With the continued oversight of the state insurance departments, viatical settlements will continue to be a viable option for consumers who are looking for a way to maximize the value of their life insurance policies.