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- New York licenses life settlement companies under new law
- December 16th, 2010 11:11 AM
Two life settlement providers have been licensed by the New York State Insurance Department under a new state law that allows the department to the regulate financial transactions between consumers and a third party they may be selling a life insurance policy to, the department announced.
The law became effective in May and is the first in the state to regulate the life settlement industry in this manner. Life settlement transactions allow a policyholder to sell an unneeded policy to a third party for more than its cash value, but less than its death benefit.
An additional 29 companies are currently waiting to be licensed under the new law but can continue to stay in business until the process is completed, said New York insurance superintendent James J. Wrynn.
The law requires that a life insurance policy owner receive a consumer information booklet and other crucial information needed before making a decision to enter into a life settlement. It also protects against the unlawful release of the insured party’s identity, medical and financial information.
Unaffordable premium payments, changes in estate or tax laws, and being in possession of an unwanted policy are all reasons why life insurance owners may decide to sell their policies and enter into a life settlement, the Life Settlement Institute reports.
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