Viatical settlements have been around for several decades, but they remain a relatively unknown and misunderstood concept for many people. As a type of life insurance transaction, viatical settlements involve the sale of a life insurance policy by the policyholder to a third party for a lump sum of cash. But with this type of financial transaction comes the need for regulation and oversight to protect consumers and ensure that viatical settlements are conducted in a fair and ethical manner.
So, who regulates viatical settlements? This article will explore the regulations and governing bodies that oversee this type of life insurance transaction in three major countries: the United States, the United Kingdom, and Australia.
Regulations in the United States:
In the United States, viatical settlements are regulated on a state-by-state basis. This means that each state has its own set of rules and regulations that must be followed by viatical settlement providers and brokers.
In many states, viatical settlement providers and brokers must be licensed by the state insurance commissioner. They must also comply with various state laws and regulations, such as requirements for disclosure of information to consumers, restrictions on who can participate in viatical settlements, and limitations on the amount of money that can be received from a viatical settlement.
In addition to state-level regulations, viatical settlements in the United States are also subject to federal tax laws. For example, the Internal Revenue Service (IRS) considers viatical settlements to be taxable events, meaning that the policyholder may be required to pay taxes on the amount received from the sale of their policy.
Regulations in the United Kingdom:
In the United Kingdom, viatical settlements are regulated by the Financial Conduct Authority (FCA). This governing body has the authority to regulate all financial services providers, including those that offer viatical settlements.
Under the FCA’s regulations, viatical settlement providers must be authorized to operate in the UK and must comply with various rules and standards, including requirements for disclosure of information to consumers, restrictions on who can participate in viatical settlements, and limitations on the amount of money that can be received from a viatical settlement.
The FCA also requires viatical settlement providers to have appropriate systems and controls in place to protect consumers and prevent fraud and abuse. Additionally, viatical settlement providers must have adequate capital and insurance to cover any losses that may arise from their business activities.
Regulations in Australia:
In Australia, viatical settlements are regulated by the Australian Securities and Investments Commission (ASIC). This governing body is responsible for regulating financial services providers, including those that offer viatical settlements.
Under ASIC’s regulations, viatical settlement providers must be authorized to operate in Australia and must comply with various rules and standards, including requirements for disclosure of information to consumers, restrictions on who can participate in viatical settlements, and limitations on the amount of money that can be received from a viatical settlement.
Like the FCA in the UK, ASIC also requires viatical settlement providers to have appropriate systems and controls in place to protect consumers and prevent fraud and abuse. Additionally, viatical settlement providers must have adequate capital and insurance to cover any losses that may arise from their business activities.
Conclusion:
In conclusion, viatical settlements are regulated in different ways in different countries, but the basic goal of these regulations is to protect consumers and ensure that viatical settlements are conducted in a fair and ethical manner. Whether you’re in the United States, the United Kingdom, or Australia, it’s important to familiarize