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