| Ohio is the first state to pass viatical settlement
legislation based upon the National Association of Insurance
Commissioners' (NAIC) revised Viatical Settlements Model Act. The new
legislation, signed into law on Jan. 5, 2001, gives the Ohio Department
of Insurance (DOI) jurisdiction over the viatical industry, including
the areas of fraud control and broker licensing. The new law expands the definition of viatical settlements to
include life settlements and senior settlements. Life settlements are
the sale of life insurance policies by healthy individuals in exchange
for cash, and so-called "senior settlements" are the sale of life insurance policies by senior citizens who do not need life insurance or cannot pay the premiums.
Neither
life nor senior settlements were previously regulated alongside
viatical settlements. The NAIC updated its Viatical Settlements Model
Act in December 2000, and Ohio is the first state to adopt the changes.
Viatical providers or brokers must now be licensed by the
DOI before engaging in viatical sales. Brokers are required to make
full disclosure regarding their role in the transaction and how they
will be compensated. The act also includes detailed definitions of
viatical fraud, outlining penalties for violation, and requires
licensed viatical providers and brokers to provide an "anti-fraud plan"
detailing their efforts to prevent and report viatical fraud. The law also prohibits brokers from entering into a
viatical settlement contract on a life insurance policy they have sold
within the first two years that the policy is in-force.
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