News Releases

June 09, 2009

Governor Signs Senior Protection Bill Into Law

Waterbury, VT – On Monday, June 1, at the Waterbury Area Senior Center, Governor Jim

Douglas signed into law H.222, An Act Relating to Senior Protection and Financial Services. It

contains several provisions to protect older Vermonters who purchase certain types of lending

and insurance products. The Governor was joined by area seniors, Administration officials,

aging issues advocates, and representatives from the American Council of Life Insurers, the

Vermont Mortgage Bankers Association and the Vermont Bankers Association, among others.

Governor Douglas said, “As we all know, these are difficult economic times. Life can be

especially difficult for senior citizens on fixed incomes and reduced retirement savings. It’s

unfortunate that during economic turndowns we often see a rise in predatory and exploitive

practices by a few bad apples. This bill helps protect the financial resources of older Vermonters

by prohibiting opportunistic and unscrupulous practices that take advantage of seniors’ financial

fears and circumstances. It also helps ensure that those conducting legitimate financial business

with seniors are held to the highest professional standards and can offer products in a fair and

regulated market.”

Paulette Thabault, Commissioner of Banking, Insurance and Heath Care Administration

(BISHCA), said, “Vermont seniors are among our savviest citizens but they are also among our

most vulnerable populations. We must continually act to prevent new angles of financial

exploitation aimed at seniors and others, and help uphold the standards and good name of the

legitimate marketplace.”

H.222 includes a number of important provisions:

• Requires consumer disclosures and regulation of legitimate life insurance settlements and

prohibits “stranger originated life insurance” (known as STOLI). Generally, STOLI

transactions occur when a third party, usually an investor group, entices a senior citizen

to take out a life insurance policy. The investor group then takes over the policy and

hopes to profit by receiving the death benefits when the senior dies. The sooner the

insured person dies, the higher the return to the investor group. Seniors caught up in

these schemes can face a range of problems, including unexpected taxes and loss of

eligibility for Medicaid. Policyholders who have a legitimate interest in assigning their

life insurance policy to others are not affected by this law.

• Authorizes BISHCA to regulate the use of Senior Designations and Certifications by

sellers of investment and insurance products, to halt misleading representations by those

who hold themselves out as senior experts.

• Strengthens protections for seniors obtaining reverse mortgages. A reverse mortgage is a

legitimate transaction that can be a useful financial tool for seniors that allows them to

tap the equity in their own homes. Unregulated reverse mortgage transactions, however,

can jeopardize a borrower’s home when it is still needed, or cause the loss of agreed upon

payments to the homeowner if the lender becomes insolvent.

“This legislation is an example of government at its best, with the executive and legislative

branches working together to pass a strong law that serves and protects Vermont seniors,” said

Ross Sargent, senior counsel for the American Council of Life Insurers.

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Source: Office of the Governor
Last Updated at: June 09, 2009 16:11:31