Most U.S. states, as well as the territory of Puerto Rico, have adopted life insurance regulations to protect consumers. State insurance services are generally responsible for enforcing these rules. In any state where there are regulations, there is a waiting period of two to five years before it can be sold (some exceptions apply). The laws also require transparency throughout the life insurance process so that the policyholder understands the benefits, risks, fees and potential alternatives to life insurance. A person who designates another person as a beneficiary thus confers the necessary insurable interest. Corder v. Prudential Insurance Company, 42 Miscellaneous 2d 423, 348 N.Y.S. 2d 265 (Sup. Ct. Erie County, 1964). Under Section 3205(b) of the New York Insurance Act, a viatic settlement company may make legal claims to purchase policies immediately after issuance, provided that the policy is initially issued to a person with an insurable interest at the time the contract is entered into.
It is also clear that the insured person could immediately and validly transfer his policy to another natural or legal person, and there is no legal prohibition on requiring such assignments from persons who have existing policies. As a result, nothing in Section 78 of the New York Insurance Act limits a viatic settlement company to the purchase of a single policy from Viator. New York Insurance Law § 3205 (McKinney 2001) regulates insurable interest rates with respect to life insurance. Section 3205(a)(1) of the New York Insurance Act defines insurable interest: In 1993, the National Association of Insurance Commissioners («NAIC») passed the Model Law on Viatic Regulations (the «NAIC Model»).  The Model Law on Viatic Regulations aimed to put an end to STOLI transactions and strengthen consumer protection in the field of life insurance accounting without violating legitimate estate planning operations. The NAIC model limits the most obvious form of STOLI – the sale of life insurance policies created or manufactured solely for the purpose of third-party investments, and requires life insurance brokers to disclose to policyholders information about settlement transactions, such as brokerage commissions and competing offers to purchase. The model also recognizes a policyholder`s right to sell or assign a policy, but initially establishes a two-year waiting period for such a sale; It was then replaced by a five-year waiting period.  and Viatical Settlements Model Act Legislative History (NaIC Model Regulatory Service – April 2008). STOLI has become so popular that many producers and insurers have mistaken it for legitimate life insurance policies based on properly formed policies with valid insurable interest rates.
 If you decide to make a lifetime arrangement, here are some questions you should definitely ask yourself. With the development of the life insurance industry in the United States, providers have often become intermediaries between non-Americans. Investors (or investors who do not have a supplier license) and sellers. The stratification of intermediaries (sellers and brokers) in a private and illiquid market, as well as the significant lack of transparency in the pricing process are points that require investors` attention – a variety of erroneous behaviors can be introduced by sell-side agents, including pump and discharge type attitudes, purchases of life expectancy reports (to show buyers only those who have a more life expectancy short, which imply a higher present value of the policy), draw unfavorable medical records (to get life expectancy insurers to subscribe to a shorter life expectancy, which in turn implies a higher present value of the policy), feign high offers to inflate auction prices, etc.  (2) No person may, directly or by assignment or otherwise, obtain or cause to be obtained a contract of insurance from the person of another unless the benefits provided for in this contract are paid to the insured or his or her personal representatives or to a person who has an insurable interest in the insured person at the time the contract is entered into. A life insurance provider is a third-party investor or a company that wants to purchase life insurance for as little as possible. Although the secondary life insurance market is relatively new, it has been in the making for over 100 years. The life insurance market would not have emerged without a series of events, court decisions and key people. Viator means the holder of a life insurance policy that insures the life of a person with a catastrophic or life-threatening illness or condition who enters into an agreement under which the viatic settlement company pays an indemnity or something of value the compensation or value of which is less than the death benefit provided for in the insurance policy; in consideration for the transfer, transfer, sale, development or inheritance of the death benefit or ownership of the insurance policy by the Viator to the Viatical Settlement Company.
Viator may also include a person insured under a group life insurance policy who is not prohibited from assigning his or her rights or benefits and who assigns those rights or benefits through a partnership settlement. The NCOIL model deals more directly with the variety of systems that life insurers have faced since the publication of the NAIC model. As a result, the NCOIL model is much broader and seeks to include all manifestations of STOLI, including the indirect sale of economic interests in trusts or policies, in its prohibitions.  Under a life insurance contract, an insured person sells his or her life insurance policy to a third party in exchange for money, a loan or other consideration […].