Wednesday, May 28, 2014
In many states, life insurance carriers may void policies for lack of insurable interest at any point, even after the contestability period set by the statute. However, in a new law recently taking effect in Minnesota, investors may file declaratory actions on policies $1 million or more in face, seeking judgments conclusively validating those policies, although no death benefit claim has been submitted. This law is the first settlement investor-friendly legislation to be passed.
The new law provides that a policy’s “owner of record,” or the trustee that owns the policy on behalf of an investor, has two years to seek a declaratory judgment that the policy had a valid insurable interest at origin. Furthermore, the law does not oblige an investor to wait for validation until the insurer retracts the policy. The law pertains to the owners of policies at the time of their enactment.
See Stephen Foresta, New Minnesota Law Allows Investors To File Lawsuits Seeking To Validate Life Insurance Policies Before They Mature, Mondaq, May 22, 2014.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.