Trade associations representing the life insurance industry and agents today applauded New York's passage of life settlement legislation.
The American Council of Life Insurers, the National Association of Insurance and Financial Advisors, and the Life Insurance Council of New York Inc. cheered the development.
The law was approved
this week
by the New York State Assembly, and it has been green-lighted by the state senate. It awaits Gov. David Paterson's signature.
“The legislation places New York among a growing number of states battling against [stranger-originated life insurance] and those who would abuse senior citizens,” Frank Keating, president and chief executive of the ACLI, said in a statement. “It also gives seniors considering a life insurance settlement new rights to assure they get a fair deal. We are happy to endorse this legislation.”
NAIFA president Thomas D. Currey is also pleased with the outcome. “New York legislators have taken action to protect the integrity of the life insurance marketplace in a way that will curb Stoli abuses, while maintaining the availability of the life insurance products that will secure the financial future of New York's citizens,” he said in a statement.
In Stoli transactions, financial speculators or their reps induce senior citizens to purchase life insurance — policies the seniors would not otherwise buy — solely to transfer the death benefits to the speculators. The speculators pay the premiums, betting they'll receive the death benefits when the seniors die.
Seniors who get involved in Stoli arrangements may be asked by the speculators to commit fraud by lying on policy applications.
New York is the 27th state to enact legislation targeting Stoli transactions.
