Life Settlement Regulation
Forty-three states and the territory of Puerto Rico regulate life settlements, affording approximately 90% of the United States population protection under comprehensive life settlement laws and regulations.
Thirty of the regulated states have a statutorily mandated two-year waiting period before one can sell their life insurance policy, while 11 states have five-year waiting periods and one state, Minnesota, has a four-year waiting period. Most states have provisions within their life settlement acts whereby one can sell their policy before the waiting period if they meet certain criteria (i.e. owner/insured is terminally or chronically ill, divorce, retirement, physical or mental disability, etc.). Twenty of those states follow or very closely follow the National Conference of Insurance Legislators (NCOIL) Life Settlement Model Act, representing almost 53% of the U.S. population. Conversely, 12 states (roughly 12%) have passed a hybrid of the National Association of Insurance Commissioners (NAIC) Viatical Settlements Model and the NCOIL Model, or some variation thereof, or the pure NAIC Viatical Settlements Model Act.
Michigan and New Mexico regulate viatical settlements only, while Alabama, Missouri, South Carolina, South Dakota, Wyoming, and Washington, D.C. do not regulate viatical nor life settlements. Most unregulated states and states that regulate viaticals only, with the exception of Missouri, who has a one-year contestability period, have a two-year contestability period under their general insurance code.