In the ongoing Wild Wild West world of the Life Settlement Industry, Governor Arnold Schwarzenegger (California) recently signed Senate Bill 98, which imposes new limitations on stranger-originated life insurance (STOLI). The following is a summary of provisions of the new law:

• Policy owners cannot enter into a life settlement for two years after a policy is issued.
• Trusts and special purpose entities (in which one or more beneficiaries of these trusts or special purpose entities do not have an insurable interest in the life of the insured) violate the insurable interest laws and the prohibition against wagering on life.
• A person cannot broker or solicit life settlements without a license issued by the insurance commissioner.
• The law contains provisions relating to the confidentiality of the insured’s medical and financial information and the annual statements of life settlement licensees.
• With certain exceptions, the law does not apply to any life settlement contract entered into on or before July 1, 2010.
• An insurer cannot restrict the lawful transfer of ownership, change of beneficiary, or assignment of a policy.

For more information, visit www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0051-0100/sb_98_bill_20091011_chaptered.html

- Anthony Steuer, Life Insurance Consultant, Author: Questions & Answers on Life Insurance, www.tonysteuer.com