Viatical settlements are governed by the Federal government and are subject to regulation since the 1990s. The Viatical Settlements Act of 2009 was enacted with the expectation of giving better protection to life insurance policyholders who are considering the sale of their life insurance policies. This is a presentation on the Viatical Settlements Act of 2009 and how it has been affecting the viatical settlements.
Background:
A viatical settlement is an agreement where the policyholder sells their life insurance policy to a third party for a one-time payment that is lower than the benefit value of the policy. This type of settlement is typically agreed upon by policyholders who have a serious disease and are in dire financial circumstances. The Viatical Settlements Act of 2009 was established to provide more shields for the investors who plan to sell their policies along with consumers.
Key Provisions of the Viatical Settlements Act of 2009:
- Definition of Viatical Settlements: The Act says that a viatical settlement is the sale of the ownership of a life insurance policy from one party to another party to receive an amount that is less than the death benefit of the policy.
- Licensing Requirements: The Act sets up that all viatical settlement providers and brokers concerning the appropriate state insurance department must get license. It ensures that only those who have necessary qualifications and experience are included in the transaction of viatical settlements.
- Disclosure Requirements: The Act compels viatical settlement providers and brokers to present policyholders with full disclosure and comprehensive information about the viatical settlement process, including clear description and the customer’s right to cancel the transaction.
- Prohibited Transactions: It is forbidden to conclude various kinds of transactions, such as insurance policy sales to unlicensed persons and insurance policy sales to policyholders who are not terminally or chronically ill.
- Consumer Protections: The Act includes additional consumer protections, such as the right to disengage from the agreement within a specific time frame and the right to receive a full refund of any consideration paid.
Impact of the Viatical Settlements Act of 2009:
The passage of the Viatical Settlements Act of 2009 has fostered growth in the viatical settlements industry by introducing more safeguards to consumers and by making sure that only professionals with proper qualifications and experience conduct viatical transactions. Viatical settlements have benefitted from the implementation of the Act, which has seen them become an open and regulated process, thereby giving consumers more confidence when contemplating the sale of their life insurance policies.
Conclusion:
The Viatical Settlements Act of 2009 has played a key role in increasing consumer protection for people who are thinking about selling their life insurance policies. Through licensing, disclosure, and restriction of certain transactions, the Act has played a key role in making sure that viatical settlements are a safe and secure option for policyholders who have financial problems or have health problems. With the oversight of the state insurance departments viatical settlements will remain a viable option for consumers who want to get the best value out of their life insurance policies.