The National Conference of Insurance Legislators (NCOIL) declared that final passage of the Life Insurance Consumer Disclosure Model Law is intended to be “a strong stand for life insurance policy owners and would empower consumers through education about their options.”  The Model Law would also provide for uniformity across the country as legislatures adopt this law to protect consumer rights for policy owners in their states.  NCOIL’s Executive Committee unanimously approved the Model Law. 

NCOIL President Rob Damron (KY), upon adoption of the model, said, “It is imperative that policy holders understand that they have alternatives to merely lapsing or surrendering their policy.  The model would require a clear notice to consumers, listing eight available options, including accelerated death benefits, conversion to long term care, and the possibility of a life settlement.” 

During testimony at NCOIL’s annual meeting Life Care Funding Group argued for consumers to have access to as much information and as many options as possible if they are considering surrendering or allowing a life insurance policy to lapse.  The life insurance industry, represented by ACLI and MetLife argued that consumers could become confused if given too much information about their legal rights to alternative ways to keep their life insurance policies in force or convert them to other uses.   

Chris Orestis, President of Life Care Funding Group testified that, “Our case workers hear from seniors and their families every day who have been paying premiums for years and are getting ready to abandon their policy.  These are middle class Americans without insurance expertise and the typical size of their policy is well under $500,000.  They are being told by their insurance company that their only option is to pay or walk away.”  He went on to give the example of a family with a life insurance policy about to lapse that they converted quickly into a long term care benefit plan that will help cover the costs of an assisted living facility for the next couple of years. 

He concluded his testimony by saying, “With this Consumer Disclosure law, policy owners will not make decisions based on a lack of information and instead will be informed that they have a number of options to consider first that could make a significant difference in their lives, and at a time when they need it most.”

NCOIL Press Release: NCOIL Official Statement on Consumer Disclosure Passage.pdf (32.05 kb)