Georgia passes life insurance disclosure law to protect rights of policy holders

by Jim Orr

The Georgia state legislature has passed a new law that will help to ensure that life insurance policy holders in the state are better informed about their right to sell unwanted insurance in the form of life settlements. The new law, known as the Life Insurance Consumer Disclosure Act, requires that the insurance company send a notice to any policy owner who is age 60 or older or is known to be terminally or chronically ill when the policy owner submits a request to surrender their policy, for a loan against the policy, for accelerated death benefits or for a reduction in the face amount of the policy. The notice is also required when the insurer sends a lapse notice to a 60 or older or ill policy owner. The required notice must advise policy owners of their right to sell their policy as a life settlement, as well as the fact that their policy may offer other so-called “living benefits.” The new Georgia law makes it an unfair trade practice for an insurance company to fail to provide the required notice.

Life settlements are transactions where life insurance policies are sold by the policy holders to investors for a lump-sum payment less than the total face value of the policies. When the original owner of the policy dies, the proceeds, or “death benefit”, from the insurance policy are paid to the investor who purchased it, rather than to the original beneficiary of the insured individual. Life settlements enable insured individuals with unwanted life insurance to receive payment for these policies, rather than waiting for the policy to reach maturity.

The “living benefits” of which the new Georgia law requires notice are offered by most modern insurance policies.  The “living benefits” are alternatives for insurance policy holders besides allowing their policy to lapse or surrendering it to the insurance company. Living benefits available to insurance policy holders include accelerated death benefits, premium waiver, nursing home benefits, and critical illness benefits. However, many insurance policy owners are unaware that these options are available to them.

The two Georgia congressmen who sponsored the bill, Rep. Carl Rogers and Sen. Marty Harbin, say that in the past, insurance agents have been fired by the insurance company for informing policy holders that they have alternatives besides surrendering a policy or allowing it to lapse. The congressmen say that many insurance policy holders are unaware of the living benefits of their policies that give them options besides the surrender or lapse of a policy, which is more profitable for the insurance company.

Georgia is the latest state to pass laws guaranteeing the right of insurance policy holders to be informed about their option to sell life insurance in the form of life settlements. As we wrote earlier this year, the states of Kentucky, Maine, Oregon, Washington, and Wisconsin have also passed laws to ensure that life insurance policy holders are informed of their right to sell these policies in the form of life settlements. Several lawsuits have been filed by insured individuals against their insurance company over their failure to disclose the policy holder’s options to lapse or surrender of a policy. While some of these claims involve violations of state life settlement disclosure laws, lawsuits have also been filed in states where no such disclosure laws currently exist.

Life Settlements Lawsuits Filed by HO&P

If you or your company were the victim of wrongful actions related to the life settlement industry, you may be able to file a lawsuit to recover some or all of your losses. The first step to filing a lawsuit is to speak with a law firm that has the knowledge and experience with life settlement litigation to achieve the best possible result in your case.

The law firm of Heygood, Orr & Pearson has represented individuals and companies in many different types of lawsuits related to the life settlement industry. Some of these cases have involved insurance companies that refused to pay the death benefits on a valid insurance policy because the insurer claimed that it was a STOLI policy.

Heygood, Orr & Pearson has also handled litigation involving investors who were misled by a life settlement provider about the value of their life settlement investments or who were charged excessive amounts based on bogus life expectancy estimates. Our lawyers have also filed cases and defended cases on behalf of brokers who handle life settlements.

For a free legal consultation, contact the lawyers at Heygood, Orr & Pearson by calling our toll-free hotline at 1-877-446-9001. You can also reach us by following the link and filling out our free case evaluation form, and one of our representatives will be in touch with you as soon as possible.

by Jim Orr

Jim Orr is a licensed attorney and a partner at HO&P focusing on business and personal injury litigation. Jim was selected multiple times to the Super Lawyers List and has tried 70+ cases to verdict.