Sunday, April 27, 2008
Nebraska Steps To Forefront Of Efforts To Protect Seniors And Secure Social Purpose Of Life Insurance. Insurance Newsnet.com Nebraska lawmakers have acted to protect senior citizens and to secure the good social purpose of life insurance as financial protection for families and businesses, said Frank Keating, president and CEO of the American Council of Life Insurers (ACLI). By a final vote of 40-2, the Nebraska Senate approved Legislative Bill 853, which would deter a practice called stranger-originated life insurance (STOLI). In STOLI transactions, speculators such as hedge funds, or their representatives, induce seniors to purchase life insurance solely to sell the death benefits to the speculators. The speculators hope to profit when the seniors die, and the sooner they die, the higher the profits. LB 853, which is based on model legislation developed by the National Association of Insurance Commissioners (NAIC), would require the speculators in STOLI arrangements to wait at least five years before acquiring the rights to the death benefits, thus reducing the economic incentives for STOLI. This five-year period applies only to STOLI policies and would not affect the ability of good-faith life insurance consumers to sell their policies if they decide they no longer need or want their life insurance protection. “STOLI transactions pose numerous risks to seniors and we applaud Nebraska lawmakers for being among the first in the nation to adopt strong measures against this abuse. Life insurance is for financial protection of families and businesses. It should never be purchased solely as an investment scheme for hedge funds. Fortunately, states around the nation are following Nebraska’s lead and considering legislation to deter this abuse of their seniors,” Keating said. “Nebraska Insurance Director Ann Frohman and Sen. Rich Pahls (District 31-Omaha), who chairs the Banking, Commerce and Insurance Committee, took the lead in advancing the vital consumer protections in LB 853 over the objections of the hedge funds who profit from these abuses. Nebraska seniors—indeed, all consumers—can thank them for standing up for the people of Nebraska,” Keating said. The bill now goes to Gov. Dave Heineman (R), who is expected to sign it. The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association whose 353 member companies account for 93 percent of the life insurance industry’s total assets in the United States, 93 percent of life insurance premiums and 94 percent of annuity considerations. In addition to life insurance and annuities, ACLI member companies offer pensions, including 401(k)s, long-term care insurance, disability income insurance and other retirement and financial protection products, as well as reinsurance. ACLI's public Web site can be accessed at www.acli.com.