Panel Adopts Report on Life Settlements.The Life Insurance and Annuities Committee of the National Association of Insurance Commissioners The National Association of Insurance Commissioners (NAIC) is an Internal Revenue Code Section 501(c)(3) non-profit organization which seeks to organize the regulatory and supervisory efforts of the various state insurance commissioners from around the United States. unanimously adopted a report that would outline state regulation of life settlements, the practice of healthy insureds selling their life insurance policies to investors for cash. The committee's action means the updated model act contained in the report is likely to be approved by the full NAIC NAIC See National Association of Investors Corporation (NAIC). in March, Massachusetts Commissioner Linda Ruthardt said. It would then be up to individual states to adopt the model as law. The report proposes an addition to the Viatical Settlements viatical settlement Arrangement by which a terminally ill patient's life-insurance policy is sold to provide funds while the insured (viator) is living. The buyer (funder), usually an investment company, pays the patient a lump sum of 50–80% of the policy's face Model Act, which was adopted in 1993 and extensively amended in 1998. Under the proposal, life settlements would be added to the definition of viatical settlements, so the model would cover any sale of a life insurance policy for less than its face amount. The viatical vi·at·i·cal adj. 1. or vi·at·ic Of or relating to traveling, a road, or a way. 2. Of or relating to a contractual arrangement in which a business buys life insurance policies from terminally ill patients for a percentage business sprouted when parties began buying the policies of the terminally ill Terminally Ill When a person is not expected to live more than 12 months. Notes: Any gifts given out by the afflicted person at this time may be considered as a dispersion of the estate rather than a gift. at a discount to face value. Since then, the terminally ill business has fallen, but the life settlement business has exploded. The Viatical Settlements Working Group, which drew up the proposal, also included sections on fraud prevention and control and on criminal and civil remedies. |
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