In July, Oregon Governor, Ted Kulongoski, signed into law Senate Bill 973 (as adopted, the “Act”), which modifies Oregon life settlement legislation. The Act was introduced at the request of the American Council of Life Insurers and is designed to restrict stranger-owned life insurance (“STOLI”) transactions in which unrelated third parties would purchase life insurance policies on the lives of “strangers.”
Among other things, the Act requires insureds to hold premium financed life insurance policies for a period of five years before selling such policies in the secondary market, and imposes restrictions on advertising of life settlement contracts and related products. It grants the Department of Consumer and Business Services (“DCBS”) rulemaking authority, and directs the DCBS to provide educational information to the public regarding consumers’ rights as an owner of a life insurance policy. Violation of the Act constitutes an unlawful trade practice.
The Act also requires that carriers notify insureds who are 60 years or older and considering surrendering their policies that other options are available, such as the option to life settle the policies. The notice should include the following statement in large, bold or conspicuous print: “Life insurance is a critical part of a broader financial plan. There are many options available, and you have the right to shop around and seek advice from different financial advisers in order to find the option best suited to your needs.” The notice must also tell insured that they may contact DCBS to get additional information.
The Act will become effective on January 1, 2010.