Life settlements date back to the 1980s, when they were known as viaticals. Viatical settlement companies brokered the sale of life insurance policies from terminally ill consumers to investors. Viaticals were particularly popular among AIDS patients who would sell life insurance policies for less than they were worth so that they could pay for expensive treatments and live longer. Companies and investors eventually moved beyond the terminally ill to purchase policies from senior citizens. These agreements became known as life settlements.
Florida laws do not distinguish between viaticals and life settlements, according to the Florida Office of Insurance Regulation. With one of the country's largest elderly populations, Florida was home to 25 percent of the nation's viatical/life settlement transactions in 2008, according to the FOIR. In 2008, 529 policies worth $1.3 billion in face value were sold in the state for $257 million. Because of the large volume of transactions, Florida has been at the forefront of efforts to regulate the life settlement industry.

Licensure

- Florida implemented its Viatical Settlement Act in 1996 to protect policy owners. The initial requirements included that providers of brokers of viatical settlements be licensed by the state. To obtain a license, viatical settlement providers must provide basic biographical information and fingerprints, consent to a background check and pay a $500 application fee. Applicants also must provide a detailed plan of operation and be judged competent, trustworthy and reputable by regulators. Viatical brokers and life expectancy providers, who determine life expectancies used in settlements, are subject to similar licensing requirements.

Contracts

- Viatical settlement brokers and providers must tell policy owners that there are alternatives to settlement contracts and that proceeds could be taxable, subjected to creditors' claims and affect eligibility for government benefits. policy owners also must be told that they have 15 days to rescind the contract and return the proceeds.

Anti-fraud

- Viatical settlement providers and life expectancy providers are required to provide the state with an anti-fraud plan that describes how they will identify, resolve and report fraudulent acts. Providers also have to describe how personnel will be trained in anti-fraud procedures and state who will investigate "material inconsistencies" between insurance applications and medical records. Viatical settlement providers must tell regulators how they will ascertain the accuracy of projected life expectancies used in settlements as well.

Source: http://www.ehow.com