Regulators


As mentioned earlier, government regulators tend to react to past problems.  In an effort to curb some of the abuses that have occurred in this new market, many states have enacted regulations governing the viatical industry.  Some states view the industry as providing investment opportunities to the purchasers of viaticated policies.  These states design their rules from a securities point of view and give the state securities regulators jurisdiction over these transactions.    Other states look at the sale of insurance policies as an insurance matter, to be governed in the context of insurance regulations.  To assist those states, the National Association of Insurance Commissioners -- aided by two viatical trade organizations and other insurance industry associations -- drafted a model law in 1994: the Viatical Settlements Model Act.  Some states have adopted that Model Law, others have drafted their own legislation.  To date the federal government has allowed the individual states to regulate the viatical industry.  The only current federal rules on viatical settlements deal with the tax consequences of the sale.    Each state is free to adopt its own legislation.  Currently 35 of the 51 jurisdictions (including the District of Columbia) regulate viatical settlement in some fashion.    


Subject to
Securities Regulators
Subject to
Insurance Regulators
Unregulated
Arizona
Iowa
Maine
North Dakota
South Dakota
Alaska      
Arkansas
California
Connecticut
Delaware
Florida
Indiana
Illinois
Kansas
Kentucky
Louisiana
Massachusetts
Michigan
Minnesota
Mississippi
Montana
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Tennessee
Texas
Utah
Vermont
Virginia
Washington
Wisconsin
Alabama
Colorado
District of Columbia
Georgia
Hawaii
Idaho
Maryland
Missouri *
Nebraska
Nevada
New Hampshire *
Pennsylvania *
Rhode Island
South Carolina
West Virginia
Wyoming









* legislation pending


The regulation of lifetime settlements is a "hot" topic among regulators, and state laws are subject to change.  It is important that those involved in arranging lifetime settlements be aware of the regulations that apply in their respective states.


Viatical Settlements Model Act
.
The



For the complete text of the  Viatical Settlements Model Act. .