In October 2009, California Gov. Arnold Schwarzenegger signed a bill that includes what many industry experts are calling the most stringent regulations on life insurance settlement terms in the nation. According to the Los Angeles Times, the law is intended to halt the practice of investors paying senior citizens to take out life insurance policies and then immediately hand them over to them.
(This is different than a senior life settlement, where a third party purchases an existing life insurance policy from a person in exchange for an upfront lump sum of cash.)
Last year, Gov. Schwarzenegger voted on a similar bill dealing with life settlements, saying at the time that the legislation didn’t provide enough disclosure to consumers. Opponents of the bill said that it was too stringent in taking away the rights of people to sell their property such as their life insurance policy and that it was also riddled with loopholes.