Wisconsin Enacts Strong Legislation Protecting Seniors From Fraud, Abuse
Contact:
Sheila Owens
Vice President, Communications & Marketing
703-770-8112
WASHINGTON, DC (May 14, 2010) — Wisconsin Governor Jim Doyle (D) has signed legislation that will provide senior citizens with some of the strongest protections in the nation against a fraudulent transaction called stranger-originated life insurance (STOLI).
In STOLI transactions, investors such as hedge funds speculate on human life by inducing senior citizens to acquire life insurance policies solely to transfer ownership of the policies to the investors. The investors hope to profit by collecting the death benefits after the seniors die. The sooner the seniors die, the higher the profit.
The centerpiece of the legislation, SB 513, is a provision that removes much of the economic incentive for fraud by forcing STOLI promoters to wait at least five years before collecting the death benefits. This limitation applies only to STOLI policies. Seniors who acquired life insurance policies in good faith for protection or estate planning purposes will not be affected by it.
SB 513 also establishes a statutory definition of STOLI and classifies it as a fraudulent act. In addition, it gives the Wisconsin Office of the Commissioner of Insurance new tools to monitor the marketplace and identify fraudulent transactions.
Supporters of SB 513 include the American Association of Retired Persons (AARP), the Coalition of Wisconsin Aging Groups and the Elder Law Section of the Wisconsin State Bar, the Wisconsin Council of Life Insurers and Wisconsin-NAIFA.
“SB 513 was approved unanimously by the legislature. Revulsion to this type of fraud cuts across party lines and political philosophies. Democrats and Republicans; liberals, conservatives and moderates all agree that we must prevent financial speculators from taking advantage of our senior citizens,” said Frank Keating, president and CEO of the American Council of Life Insurers (ACLI).
“In order to acquire life insurance policies, these speculators sometimes encourage seniors to lie on the policy applications. And they often fail to mention that seniors participating in these transactions could face legal liability, unexpected taxes and loss of insurance capacity. SB 513 is a necessary senior protection measure,” said Tom Currey, CLU, ChFC, LUTCF, president of the National Association of Insurance and Financial Advisors.
“Wisconsin is the 29th state to enact anti-STOLI legislation, and SB 513 ranks with the strongest bills in the nation. We look forward to the day when every state provides its senior citizens with the same degree of protection as Wisconsin,” ACLI and NAIFA said.
ACLI and NAIFA especially thank Sen. Bob Wirch (D-Pleasant Prairie), Rep. Peter Barca (D-Kenosha) and Wisconsin Insurance Commissioner Sean Dilweg for their leadership in seeing SB 513 through to enactment.
The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with more than 300 legal reserve life insurer and fraternal benefit society member companies operating in the United States. ACLI members represent more than 90 percent of the assets and premiums of the life insurance and annuity industry. In addition to life insurance and annuities, ACLI member companies offer pensions, 401(k) and other retirement plans, long-term care and disability income insurance, and reinsurance. ACLI's public Web site can be accessed at www.acli.com.
About NAIFA: NAIFA comprises more than 700 state and local associations representing the interests of approximately 200,000 agents and their associates nationwide. NAIFA members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. The Association’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members.
NAIFA, 2901 Telestar Court, Falls Church, VA 22042-1205 | 877-866-2432 |