Lawmakers over the past years have become more protective and progressive in its desire to protect the public more from unscrupulous operators, corporations and institutions and provide even more options for the consumer.  Insurance companies have long held an advantage over the insured during its entire history and investments in fractional life settlements chip away at that disparity.  Life Insurance companies have always been among the most profitable and stable stitutions due in large part to the fact that most life insurance policies lapse and are never collected on.  Life settlements provide insured seniors the opportunity of having the option to sell their policies to investors while relieving themselves of the continuing burden of paying the premiums.   With life settlements, the life insurance death benefit is virtually guaranteed to be paid out and life insurance companies by contract are obligated to pay to the policy’s legal beneficiaries.

In its desire to protect both the insured and purchasers who invest in fractional life settlements, states such as Washington, Oregon and Maine have enacted legislation that now requires life insurance companies to inform seniors that the life settlement option is available. Many other states are considering such legislation and are sure to follow suit.  Seniors are made aware of the secondary life settlements market and that the option exists in which the senior may receive more than surrendering their policy back to the life insurance company for its cash surrender value.  By enacting such laws the legislatures are, by default, endorsing the life settlements industry.

There are now 44 states along with the territory of Puerto Rico which have established regulations of life settlements.  California had spearheaded this movement through Senate Bill 1837 which it passed in August 2000 allowing the sale of fractional life settlements and detailing the compliance requirements for operators to work under in selling such interests.  This essentially opened the doors to the public and allows a segment of consumers to take advantage and participate in the returns from this asset class that only institutional investors have been enjoying for the past 15 years.  The requirements of how one can participate and qualify in such an investment is detailed in the Senate Bill 1837 and can be viewed here:  http://www.leginfo.ca.gov/pub/99-00/bill/sen/sb_1801-1850/sb_1837_bill_20000927_chaptered.html.