Securities regulators in Texas are pushing for greater state oversight of the life settlement industry. This push comes after regulators began their effort to shut down at least six companies that buy these policies from seniors.
Investors Losing Money by the Millions
Individuals who have invested money into life settlements, (life insurance policies companies purchase from senior citizen policyholders based on their life expectancies in an effort to become their beneficiaries and collect the full sum of their payout upon their deaths) are losing it by the millions, according to the Texas State Securities Board.
Those offering to set up settlement opportunities for retirees are advertising returns of 20 percent or more per year so that they will invest millions into their policies, regulators say. The more money placed into the policies, the larger the amount of cash payout is promised to retirees when the policy is settled.
Unfortunately, Texas regulators say that despite 2,200 retirees putting $220 million into policies over the past two years for life settlement cash outs, many have lost some or all of their money. This is largely due to underestimated life expectancies and other issues.
Regulators Seek Oversight of the Settlement Industry
A major lack of meaningful oversight is said to be blamed for retirees being taken advantage of by the companies that have yet to be named. It’s for this reason that the state is looking for the ability to govern the industry like other states that officially recognized life settlements as investments subject to regulation.
State Insurance Commissioner Mike Geeslin has urged lawmakers to consider tighter regulation of the business, noting in a statement that “Even though the settlement industry is relatively young, it has produced a substantial amount of harm to Texas investors.”
The only problem for regulators is that there is less than one month left in the regular session of the Legislature and, so far, no legislation has been introduced in either of the state’s legislative chambers. With little time to spare, the likelihood of regulators gaining control of the industry soon is very slim.
