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News Release

New Jersey Department of
Banking and Insurance


Commissioner Neil N. Jasey

For Immediate Release:
September 23, 2009

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064


DOBI Urges Life Insurance Consumers to
Review Transactions Carefully

TRENTON – New Jersey Department of Banking and Insurance (DOBI) Commissioner Neil N. Jasey today urged consumers to review life insurance policy sales very carefully and to take precautions before signing any documents pertaining to transactions involving life insurance contracts. Consumers should exercise particular caution when considering a viatical settlement, the sale of a life insurance policy to a third party.
 
Recent news reports indicate a possible increase in market demand for viatical settlements in which buyers become the owners of the life insurance policy, pay future premiums and collect death benefits when the insured dies. Such reports raise concern that consumers who sell their policy to get cash to pay expenses may not be reviewing all of the financial options available to them. Life insurance policy holders may find a financial solution that makes more sense and leaves them less vulnerable to offers that do not put their interests first.

“If the promises made by a salesperson sound too good to be true, they probably are,” said Commissioner Jasey. “Before selling your policy, make sure you understand the terms of the sale.”

DOBI Insurance Division Director Douglas A. Wheeler added that, “Viatical and life settlement providers and producers must be licensed in New Jersey. Contact the Department to verify that you are dealing with a licensed producer or firm.”

New Jersey viatical consumers should know:

  • Do not provide a salesperson or producer with personally identifying or financial information until you are certain that the solicitation is legitimate and that you wish to engage in the transaction.

  • The law prohibits selling your policy in a viatical transaction within two years of the time it was issued unless you provide documentation that you have become terminally or chronically ill.

  • Request documentation of every offer to purchase your policy and ask the producer to detail the commissions. A producer is entitled to commissions but the offer to purchase which pays the best commission may not be the best offer for you.

  • The producer is required by law to represent only you as the person selling your policy and owes you a fiduciary duty.

You have a right to change your mind. You can rescind a viatical settlement contract within 30 calendar days from when the contract is executed by all parties or 15 calendar days from when you receive the proceeds of the settlement, whichever date is earliest.

All New Jersey consumers who decide to sell their life insurance policies are encouraged to contact the Department at 1-800-446-7467 (SHOP) or online at www.njdobi.org to verify that the salesperson is a producer licensed to negotiate viatical settlement transactions and that the viatical settlement providers offering to buy the policy are also licensed.

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