Key Points in This Section
- Viatical and life settlements are primarily regulated at the state level; Florida’s law is found at Chapter 626, Part X, F.S. (the Viatical Settlement Act)
- In Florida, viatical settlement providers are licensed and regulated by the Office of Insurance Regulation (OIR); viatical settlement brokers are licensed and regulated by the Department of Financial Services (DFS)
- Florida requires providers to maintain a $100,000 securities deposit with the Department and prohibits settlement of policies within 2 years of issue absent specific qualifying circumstances
- Florida mandates a 15-day rescission period after contract execution and requires settlement proceeds to be held in escrow until policy transfer is confirmed
- The SEC has jurisdiction when viatical settlement interests are sold to the public as securities; the FTC monitors advertising and marketing practices
- Florida expressly prohibits STOLI practices under §626.9911(9), F.S.
Regulators
State Regulation
The primary regulation of viatical and life settlements occurs at the state level. Florida was among the first states to enact a comprehensive viatical settlement law, first passed in 1996 and substantially amended in subsequent years. The current law is found at Chapter 626, Part X, Florida Statutes (Sections 626.991–626.99295), commonly called the Florida Viatical Settlement Act.
Florida’s Regulatory Structure
Florida divides regulatory authority between two agencies:
Office of Insurance Regulation (OIR)
ProvidersThe OIR licenses and regulates viatical settlement providers — the entities that purchase life insurance policies from viators. Provider license applications require a $500 fee, financial statements, organizational documents, and background information on all officers and controlling parties. To ensure performance of obligations to viators, providers must maintain a $100,000 securities deposit in trust with the Department. All viatical settlement contracts must be filed with and approved by the OIR before use.
Department of Financial Services (DFS)
BrokersThe DFS licenses and regulates viatical settlement brokers. In Florida, a viatical settlement broker must hold a current, valid life agent license — a separate viatical settlement broker license is not required for licensed life agents. Brokers must complete continuing education on viatical settlements, disclose all offers received and commissions earned, and act in the viator’s best interest.
Key Florida Consumer Protections
| Protection | Requirement |
|---|---|
| Rescission period | Viators have 15 days after contract execution to rescind without penalty |
| Escrow requirement | Settlement proceeds must be placed in an escrow account with a licensed financial institution; payment must be made within 3 business days of policy transfer confirmation |
| 2-year settlement restriction | Florida generally prohibits settling a policy within 2 years of issue, with exceptions for terminal/chronic illness, divorce, retirement, disability, or financial hardship — mirroring the STOLI-prevention framework |
| STOLI prohibition | Florida expressly prohibits stranger-originated life insurance practices under §626.9911(9), F.S. |
| Required disclosures | Providers and brokers must disclose the offer amount, all fees, potential tax consequences, impact on government benefit eligibility, and all other offers received |
| Recordkeeping | All transaction records must be maintained for at least 5 years |
| Life expectancy providers | Providers may only obtain life expectancies from registered life expectancy providers — a Florida-specific registration requirement added to prevent manipulation of pricing |
Federal Regulators
Securities and Exchange Commission (SEC)
FederalViatical settlement interests that are sold to the public as investment securities fall under SEC jurisdiction. When settlement companies pool policies and sell fractional interests to investors — as Mutual Benefits Corporation did — those interests may constitute securities subject to federal registration and disclosure requirements. The SEC has brought enforcement actions against settlement companies that sold unregistered securities and misrepresented investment returns.
The SEC published a staff report on life settlements in 2010 examining the regulatory landscape and investor protection issues. The report noted the overlap between state insurance regulation and federal securities law, and recommended continued coordination between the two regulatory systems.
Federal Trade Commission (FTC)
FederalThe FTC has jurisdiction over deceptive and unfair marketing practices in the settlement industry. This includes misleading advertising claims, high-pressure sales tactics targeting elderly consumers, and misrepresentations about settlement proceeds or investment returns. The FTC has issued consumer alerts warning the public about settlement-related scams, particularly STOLI schemes that market “free insurance” to seniors.