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AJC.com > Legislature > Blog > Archives > 2009 > February > 04 > Entry
DEL.ICIO.USSenate votes to limit some life insurance practices
The Atlanta Journal-Constitution
The Senate voted to prohibit certain life insurance practices by a vote of 50 to 0 Wednesday morning, passing Senate Bill 61.
The legislation would not allow “stranger-initiated life insurance policies” that encourage people to take out life insurance policies that they otherwise would not have taken out. Bill sponsor Sen. Ralph Hudgens (R-Hull) explained that investors will actually loan people money so they can make the payments, and make sure the payments continue to happen, with the understanding that the investor will get the insurance policy when the individual dies.
“This whole industry of life settlements started when the AIDS epidemic first became a problem in the United States,” Hudgens said. This gave rise to the viatical settlements industry, he said, where an AIDS patient could get some money up front, and hand the policy over to the investor who helped him. In cases of terminal illness, it’s a legitimate practice, Hudgens said.
But it’s not good when investors approach a broader spectrum of the population, he said.
“This is bad for the industry,” Hudgens said. “If every life insurance policy is transferred over, the cost of everyone’s insurance is going to go up,” he said. “If this keeps taking place, we’re all going to pay for it,” he said.
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Comments
By Mad Mary
February 5, 2009 9:32 AM | Link to this
Why would an insured let a third party pay off a life insurance policy and then let the third party get the payout if the insurer did not get something up front?
If they get money up front it sounds like a reverse mortgage on your life. So what?
Why doesn’t government stay out of the business of business. Fraud is Fraud. We have laws. Our Elected Spenders have so much to do I wish they would stay out of Business and fix the government they have already created.