|
IOWA Legislature Approves Bill Protecting Seniors
Measure to Deter Stranger-Originated Life Insurance Now Awaits Governor’s Signature
Contact:
ACLI Jack Dolan
(202) 624-2418
jackdolan@acli.com
AALU Tom Korb
(703) 641-8120
korb@aalu.org
NAIFA Lee Allen
(703) 770-8112
leeallen@naifa.org
WASHINGTON, D.C. — April 14, 2008 — Legislation (S.F. 2392) that will help protect Iowa senior citizens from a fraudulent use of life insurance called stranger-originated life insurance (STOLI) was approved April 10 by the Iowa State Legislature and is now awaiting the Governor’s signature.
“The Iowa Legislature is one of the first in the nation to approve legislation aimed at deterring STOLI, which makes use of transactions designed to circumvent the state’s insurable interest laws. We are now awaiting Governor Chet Culver’s signature on this vital legislation that will protect Iowa seniors from these unscrupulous transactions,” ACLI President and CEO Governor Frank Keating said.
In STOLI transactions, investors or their representatives induce seniors to purchase life insurance for the sole purpose of selling the death benefits to the investors. The investors plan to profit when the seniors die, and the sooner the seniors die, the higher the profit. In most cases, the seniors who sign the policy applications must mislead the insurance company about their intention to sell the policy to the investors. Seniors who participate in these schemes may face unexpected taxes and fees, loss of privacy and legal concerns.
“As an advocacy organization representing top-producing life insurance agents throughout the United States, AALU has stood strongly against stranger-originated life insurance since we became aware of it in early 2004,” said Lawrence B. Raymond, CLU, ChFC, CFP®, CPC, president of the Association for Advanced Life Underwriting (AALU). “Effective legislation, such as that passed in Iowa, is designed to protect legitimate uses of life insurance and life settlements and shut down abuse. STOLI is a cancer threatening the tremendous good our members provide through life insurance planning.”
“Legislators in Iowa have taken great strides in underscoring the true value of life insurance, and in protecting the interests of senior Iowans. Life insurance products are designed to create security for the financial future of individuals and their families and those who truly depend on them for their wellbeing,” comments Jeffrey J. Taggart, CLU, ChFC, LUTCF and president of the National Association of Insurance and Financial Advisors (NAIFA). “Insurance was never intended to be used as a vehicle for financial speculation on human life, and NAIFA supports the states taking strong action to try to prevent STOLI.”
The two leading associations representing state government officials responsible for oversight of the insurance industry have each approved model laws that target STOLI. These models keep fully intact the rights of policy owners acting in good faith to sell their policies if they no longer need or want their coverage. S.F. 2392 combines important features of both.
First, S.F. 2392 establishes a limited five-year moratorium on the settlement of STOLI policies, which is a major element of the model developed by the National Association of Insurance Commissioners (NAIC), the association of state insurance regulators.
Second, S.F. 2392 establishes a legal definition of STOLI and identifies it as a fraudulent act, which are two main features of the model developed by the National Conference of Insurance Legislators (NCOIL), the association representing state legislators with responsibility for insurance.
“By adopting legislation that takes the best features from the NAIC and NCOIL models, the Iowa Legislature has provided Iowa seniors with the highest level of protection in the nation. We applaud the legislators and Insurance Commissioner Susan Voss for taking the lead in protecting seniors in their state from STOLI abuse and urge Governor Culver to sign the legislation into law,” Keating, Taggart and Raymond said.
- Print this Press Release: IOWA Legislature Approves Bill Protecting Seniors
About AALU: Founded in 1957, the Association for Advanced Life Underwriting (AALU) is a professional trade association representing 2,000 life and health insurance agents and financial advisors nationwide. Most members are engaged in complex uses of life insurance such as in business continuation planning, estate planning, charitable planning, retirement planning, deferred compensation and employee benefit planning. The mission of AALU is to promote, preserve and protect advanced life insurance planning for the benefit of its members, their clients, the industry and the general public. AALU's website can be accessed at www.aalu.org.
About ACLI: The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association whose 353 member companies account for 93 percent of the life insurance industry’s total assets in the United States, 93 percent of life insurance premiums and 94 percent of annuity considerations. In addition to life insurance and annuities, ACLI member companies offer pensions, including 401(k)s, long-term care insurance, disability income insurance and other retirement and financial protection products, as well as reinsurance. ACLI's public Web site can be accessed at www.acli.com.
About NAIFA: Founded in 1890 as the National Association of Life Underwriters, the National Association of Insurance and Financial Advisors comprises nearly 800 state and local associations representing the business interests of 60,000 members nationwide. Members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members. Visit NAIFA’s website at www.naifa.org.