Taxation & Estate Planning

Larry King and Ohio Substitute House Bill 404

By Michael D. Bonasera, Esq.

A while ago I blogged here (with an update here) on Larry King suing an adviser of his for a life settlement Mr. King apparently didn’t like (or at least regretted afterwards).

In this article in Columbus’ Business First we learn that “Ohio insurance regulators are taking aim at a method of buying life insurance policies from consumers, which they argue is hurting the industry in the state.”

The Ohio Department of Insurance is pushing Substitute House Bill 404, introduced in November, to tighten state law related to what are known as viatical settlements. The practice involves buying someone’s life insurance policy for less than its face value, taking over premium payments until the insured person dies, then collecting the full payout.

The practice offers the terminally ill or aged access to cash to pay medical bills or other expenses. For investors, viaticals hold out the promise of profits if the insured individual dies before the premium payments outstrip the payout.

As noted, in my update, a viatical settlement is different from Mr. King’s problem (which is technically a life settlement) but it appears he is not the only one who is apprehensive of using existing life insurance policies as investment opportunities by betting on the (sometimes waning) life of the original owner.

Stay tuned for updates.

Full post as published by The Ohio Trust & Estate Blog on January 30, 2008 (boomark / email).