California Signs Strong Life Settlement Legislation
Source: Life Insurance Settlement Association (LISA), Doug Head, Executive Director
On Columbus Day, 2009, California seniors were presented with the fine gift of a welcome new law regulating life settlements, Senate Bill 98. The Governor's signature on this important legislation authored by Senate Insurance Committee Chair Ron S. Calderon (D - District 30) completes extensive work by both chambers of the legislature.
The bill, which takes effect on July 1, 2010, regulates the life settlement industry in California, which has seen marked growth in the past decade. A Life Settlement is the sale of an existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit.
Senate Bill 98 is based upon model legislation developed by the National Conference of Insurance Legislators (NCOIL). "In hard economic times, this bill marks a major victory for American seniors seeking to avoid lapse or surrender of their current life insurance policies. Senate Bill 98 provides a strong regulatory framework for the ever growing life insurance settlement industry in California," declared Doug Head, LISA Executive Director. "
LISA is particularly thankful to Senator Calderon and his staff as well as to Assembly Insurance Committee Chair Jose Solorio (D - District 69) and his staff for recognizing the need for the strong consumer protections offered in this legislation. Legislators who supported this bill in committee work and in the nearly unanimous floor votes can be proud of their diligent efforts."
The signing of Senate Bill 98 brings the protections of law to an important and populous state and augments the regulation of settlements to include those persons who are not terminally ill. "We worked hard to ensure that this bill contained the right protections for consumers and ensured them the full access to this market that they deserve. Because this bill has the support of so many varied interested parties, it is an excellent model of good regulation for this growing and important consumer service," explained Russel Dorsett, LISA President.
The secondary market for life insurance is widely recognized as a burgeoning industry grounded in Supreme Court precedent (See: GRIGSBY V. RUSSELL, 222 U. S. 149 [1911]) and providing consumers with a viable financial option to the lapse or surrender of their insurance policies.
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