Regulating Viatical Settlements
03/11/08
Awaiting the Governor's signature is Senate Bill 704. SB 704 establishes statutory provisions regulating viatical settlement agreements. Simply stated, a viatical settlement agreement is a written agreement between a life insurance policyholder (a viator) and a viatical settlement provider whereby money is advanced to the policyholder by the provider in exchange for the policyholder's present or future assignment, transfer, sale, devise or bequest of the death benefit the life insurance policy. The definition of "viatical settlement provider" provided by SB 704 does not include banks, credit unions or other lending institutions that take an assignement of a life insurance policy as collateral for a loan. It also does not include the policy issuer, financing entities, or a viatical settlement purchaser. Licensing, bonding, and continuing education is required of viatical settlement providers and brokers. An attorney may negotiate viatical settlement agreements on behalf of a policyholder without obtaining a special license. The provisions of SB 704 are extremely detailed. The general purpose of the bill is to protect consumers by regulating practices and prohibiting fraud.
Before entering into a viatical settlement agreement, we recommend that you first speak with your attorney or estate planning representative to see how such an agreement would affect your retirement and testamentary wishes. If you would like to speak with an attorney at Bailey & Wyant, PLLC, please feel free to contact Marc Slotnick or Jason Winnell.
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