Gov. Linda Lingle signed into law a bill designed to protect individuals – specifically senior citizens and people suffering from chronic or terminal illness – from fraudulent activity relating to the selling and buying of life insurance policies.

The law addresses the issue of life insurance settlement contracts – called viatical settlement or life settlement contracts – in which the owner of a life insurance policy who might need money because of a terminal or chronic medical condition sells his or her policy to a broker in return for a portion of the death benefit. The broker then sells shares of the policy to investors who collect on the life insurance when the individual dies.

This law gives the Department of Commerce and Consumer Affairs the authority to license brokers and insurance salesmen who negotiate life settlement contracts, and allows DCCA to conduct investigations and examinations of brokers and life insurance writers who engage in these transactions.