At Mason Finance we believe you have the right to know about all the options available to you when considering a change in your life insurance coverage.
According to the Life Insurance Settlement Association, more than 90% of life insurance coverage lapses with no death benefit ever paid out. Consumers receive anywhere between four to seven times more cash through life settlements transactions than they would have had they surrendered their policies [See 2010 US Government Accountability and 2014 London Business School industry reports].
Why aren’t you aware of your life settlement options?
Life insurance carriers’ anti-consumer practices
To protect their financial interests life insurance companies avoid notifying policy holders of their options. A lapsed policy means that no death benefit is paid out and the premiums paid go straight to the insurance carrier’s bottom line.
Life insurance carriers are known to prevent insurance agents from discussing life insurance settlement options with customers. Insurance companies will often retaliate and forcefully silence agents who have a fiduciary responsibility to their customers.
These disturbing practices are not limited to life settlements. Life insurance carriers consistently keep policy holders in the dark about their options. These include accelerated death benefits, death benefit reductions, and loans against the policy’s cash value.
State legislators are catching up
Despite the life insurance industry’s decades-long lobbying efforts, state legislators across the country are finally mandating disclosure.
Recognizing the “Senior’s Right to Know” movement, legislators from eight states have enacted varying forms of consumer disclosure acts. Each one of these acts mandates insurers to notify policy holders of their options if they face lapsing or surrendering their policies.
These disclosure acts are now in place in Washington, Oregon, Maine, New Hampshire, Kentucky, Georgia, Florida and Wisconsin. While similar laws have been proposed in Texas and Rhode Island.
You can track legislative progress using our tracker below.
Mason Finance is tracking Your Right To Know
Source: Mason Finance Inc.
Looking towards the future
Insurance carriers will continue their efforts to limit access to information around alternatives to lapsing or surrendering life insurance policies. But we can work to make these anti-consumer practices disappear for good.
In 2016, the state of Georgia was the first state to pass a law that prevents life insurance companies from terminating, penalizing or otherwise silencing life insurance agents who inform consumers of their life settlement options.
Across the country, several lawsuits have been filed by individuals against their insurers over failure to disclose alternatives to lapsing or surrendering a policy. In California, a lawsuit filed in January 2016 alleges that concealing life settlement options is a common practice by the life insurance industry. This lawsuit should help drive legislative change in the near future.
What does this all mean to you?
You are now armed with the knowledge to check your options before lapsing or surrendering a life insurance policy. If you no longer need your life insurance policy or if you simply can’t make your premium payments, a life settlement may be the right option for you.
Check out our life settlement calculator to find out what your policy could be worth.
- LISA.org : http://www.lisa.org/life-policy-owners/consumer-news/2016/04/29/ga.-law-prohibits-silencing-of-agents-on-life-settlements
- HOP-Law : https://www.hop-law.com/georgia-passes-life-insurance-disclosure-law-to-protect-rights-of-policy-holders/
- The Street: https://www.thestreet.com/story/14054666/1/consumer-disclosure-anti-retaliation-bills-may-make-headway-this-year.html
- 2010 Life Insurance Settlements Report – US Government Accountability Office – Available Online
Bills & statutes introduced/in-progress:
- Rhode Island: HB 5628 Passed State House in June 2017 – Pending passage in Senate
- Texas: HB3008 Passed House in May 2017 – Engrossed in Senate
Bills & statutes enacted/signed:
- Florida: Section 626.99292 Signed into Law in June 2017
- Kentucky: Statute 304.15-075 Effective July 2010
- Maine: LD 1063/SP 397 Signed into Law June 2009
- Washington: RCW 48.102.100
- Oregon: Statute 744.362 Passed in 2009
- New Hampshire: NH Rev Stat 408-D:8 Passed in 2010
- Wisconsin: Admin. Code Ins. § 2.18. Passed in 2012
- Georgia: Senate Bill 136 Signed in 2016