Bryan Nelson: Legislators Be Alert For Last-Minute STOLI Changes
Rep. Bryan Nelson, R-Apopka, is working with a seniors coalition to ward off what they expect will be predatory legislation that will be pushed before legislators as the 60-day regular session draws to a close.
The STANDUP for Seniors Coalition, a group of senior advocates, veterans and concerned Floridians, announced Wednesday at the Capitol that they will be advising members to lobby legislators against proposals promoted as bolstering the Stranger-originated Life Insurance (STOLI) market.
Nelson, who chairs the House Insurance and Banking Subcommittee, and coalition members claim the changes to the STOLI market will be an effort by hedge fund and investor interests that will seek to repeal consumer protections in state law that protect seniors from being preyed upon through the lure of short-term life insurance loans to cover premiums.
When it hits, Ive got to 120 members and maybe 10 that understand the issue, and maybe 30 minutes to stop it, Nelson said.
Nelson said he didn't know who would file, or the group that would push for the last-minute amendment that would most likely be attached to a large insurance bill.
The proposal was raised in the 2012 session and Nelson expects it will return as the 2013 session approaches its send.
According to the STANDUP coalition:
"The STOLI scheme works like this: Seniors typically 65 years of age or older are encouraged to purchase large, unneeded life insurance policies. The speculators offer to pay the policy premiums. After two years, marking the end of insurers contestability period (the period in which an insurer can contest and act on a misrepresentation in a policy contract), the senior is asked to sign over the entire policy to a hedge fund or other investment group.
"Once the senior signs over the policy, the investors plan to collect the death benefit when the senior dies. Lured into this fraudulent scheme, the senior could be unexpectedly exposed to tax liability for the value of the two years of premiums paid for the policy, and they also could face other stiff government penalties.
"Further worsening the situation, some seniors are unable to qualify for additional, needed life insurance for their loved ones because their insurance capacity is consumed by the STOLI scheme."
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