On May 13, 2010, Wisconsin Governor Jim Doyle signed into law Senate Bill 513 (“SB 513”) governing life settlements. SB 513 is a hybrid of the NAIC Viatical Settlements Model Act and the NCOIL Life Settlements Model Act, and includes a requirement that life insurance policies be in force for at least 5 years before they can be sold in the secondary market. There are exceptions to this requirement, such as in the case of a critical illness. The 5 year requirement has the effect of hindering stranger originated life insurance transactions (commonly referred to as STOLI transactions).
In addition to the 5 year requirement, SB 513 also:
- Requires that life settlement providers and brokers obtain licenses from the insurance commissioner;
- Imposes anti-fraud provisions, including creation of antifraud programs by brokers;
- Requires that the amount paid in a life settlement transaction be less than the death benefit, but more than the cash surrender value;
- Requires that providers and brokers provide policy owners selling policies with certain disclosures, including disclosure of the broker’s compensation;
- Requires disclosure to life settlement purchasers of the qualifications of the person determining the life expectancy of the insured person; and
- Requires life settlement providers to send written notices to insurers of the life settlements within 20 days of the owners’ agreement to sell the applicable policies.
Click here for a copy of SB 513.