Wisconsin Bill Tackles Life Settlement Legislation

Lawmakers in Wisconsin recently gave their backing to a life insurance settlement bill (SB 513) which was next awaiting Gov. Jim Doyle's signature.

The state Assembly approved the bill, along with planning to review an annuity suitability bill (SB 572) soon after.

The life insurance settlement bill made its way through the assembly minus an amendment that would necessitate disclosure that there are options available to lapsing a policy or surrendering a contract that includes life settlements.

Earlier in April a disclosure amendment was offered by one state representative. It garnered a tie 5-5 vote; however a majority vote was needed in order for the amendment to be included in the bill.

The proposed change to AB 758 and its Senate equivalent, SB 513, would have mandated that an insurance company make known the disclosure notice to an owner at all of these times:

When the insurers obtains from the owner a request to surrender, in whole or in part, an individual policy;

When the insurer obtains from the owner a request to get an accelerated death benefit under an individual policy;

When the insurer passes along to the owner any notice of lapse of an individual policy; and,

At any time when the commissioner of insurance prescribes by rule.

The amendment would have permitted the commissioner to apply the disclosure statement to contracts that had a net death benefit of $100,000 or more.

That condition, however, would only have applied if it did not discriminate against owners of life insurance based on a wide range of criteria. Among the criteria was economic status.

Separately, the Assembly Insurance Committee has also been looking at SB 572 and AB 811, that establish suitability standards for annuities reflecting changes made earlier by the National Association of Insurance Commissioners (NAIC).

SB 572 was potentially going to be finalized in late April in the legislature.