43 of the 50 states that cover
more than 90% of the US population, have enacted laws to regulate the Secondary
Market of sales of Life Insurance Policies. These laws create standards and requirements that are set in place to protect sellers, investors and intermediary parties.
Each state enacts its' own life settlement regulations that typically follow the NCOIL or NAIC life settlement model acts. States most often differ when it comes to waiting periods, disclosure requirements, buyer exemptions and the rescission period.
- Waiting period is the time from when a life insurance policy is issued to when it can be sold as a life settlement. Regardless of state regulations, buyers want to see a policy that is at least two years old to ensure the policy is outside the contest-ability period.
- Disclosure requirements vary by state and effect what application and closing documents are used as well as what information must be disclosed to each party to the transaction.
- Buyer exemptions are provided in certain states to allow life settlement transactions to be completed without the need of a life settlement provider. Providers charge additional fees and may increase the cost of life settlement transactions.
- A rescission period is the number of days a seller has to back out of a life settlement transaction after it has been completed. At any point during the transaction, prior to being complete, a seller can rescind. After the transaction closes states rescission periods typically range between 15-30 days.
Bellow is a map that shows the different waiting periods in each state as well as what type of disclosure is needed in each of those states. For more information please research your states life settlement enacted regulations.
