Senate Special Committee on Aging Holds Hearing on Life Settlements: NAIFA Submits Statement
FALLS CHURCH, VA (April 29, 2009) — Today, the U.S. Senate Special Committee on Aging convened a hearing entitled, “Betting on Death in the Life Settlement Market - What's at Stake for Seniors?” The National Association of Insurance and Financial Advisors (NAIFA) submitted a written statement to address the organization’s concerns regarding the use of life settlements to facilitate stranger-originated life insurance (STOLI) transactions.
Contact:
Lee Allen, Vice President of Communications and Marketing, NAIFA
(703) 770-8112 (office)
(703) 336-2462 (mobile)
NAIFA noted in its statement that it does not oppose all life settlements. Under the appropriate circumstances, a life settlement may provide the policy holder with the means to access the maximum value from their policy if they determine that they no longer need the insurance coverage. NAIFA does, however, support rigorous regulation and oversight of life settlements and settlement transactions.
In contrast to legitimate life settlements, STOLI arrangements involve the initiation of life insurance policies for speculative purposes, and the policies used in STOLI transactions are purchased solely to be sold in the future, to investors without any interest in the continued life of the insured. STOLI transactions are designed to evade state insurable interest and other laws and allow unrelated investors to arrange in advance for their ownership of life insurance policies. Investors use life insurance to profit from the deaths of people they do not know.
“STOLI transactions violate the essential purpose of life insurance, which is to provide protection, and pose significant risks and dangers to the senior citizens who enter into these arrangements,” warns NAIFA president Cliff F. Wilson, CLU, ChFC, LUTCF, CLF. “Life insurance should be used to protect families and businesses from the unexpected death of a breadwinner or the financial consequences of the death of an owner or key employee.”
NAIFA CEO John J. Healy, CAE, adds, “We strongly support the enactment in the states of legislation that will protect senior citizens and address the abuses occurring in the marketplace today as a result of STOLI.”
NAIFA has been at the forefront of efforts to restrict and prohibit STOLI since it first became aware of these transactions in early 2006. NAIFA’s state associations, members, and staff played major roles in helping to enact anti-STOLI legislation in 12 states in 2008.
“Our efforts included providing testimony at hearings, meeting with key legislators and insurance department staff, and broad-based grass-roots activity to encourage legislators to support the legislation,” Wilson continues. “State legislative activity for 2009 is well under way, and we are currently involved in legislative activity in over 20 states.”
About NAIFA: NAIFA comprises more than 700 state and local associations representing the interests of approximately 200,000 agents and their associates nationwide. NAIFA 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. The Association’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.
NAIFA, 2901 Telestar Court, Falls Church, VA 22042-1205 | 877-TO-NAIFA |