Tools & Guides
State-by-State Life Settlement Rules and Regulations
Life settlements are regulated in 43 states plus Puerto Rico, covering roughly 90% of the U.S. population. This is the compact reference: regulatory status, statute, waiting period, cooling-off period, and consumer complaint link for every state.
44
States + territories with full life settlement regulation
2
States regulating viatical settlements only (terminal / chronic illness)
6
States with no specific life settlement regulation
Legend:
Last updated: April 21, 2026. Verify current statute with the state DOI.
Is a Life Settlement Legal in Every State?
Life settlements are legal in every U.S. state, but only 43 states plus Puerto Rico have enacted life-settlement-specific statutes. The other 6 states (Alabama, Missouri, South Carolina, South Dakota, Wyoming) plus the District of Columbia treat life settlements as general insurance transactions without settlement-specific rules. Michigan and New Mexico regulate only viatical settlements for terminally or chronically ill insureds.
State rules govern the transaction itself. State tax treatment of the proceeds is a separate question; see our life settlement tax treatment guide for the federal three-tier framework and state tax variability.
Alaska
- Waiting
- 2 years
- Cooling-off
- 15 days
Framework covers viatical settlements (AS 21.96.110); no separate life-settlement statute
Alaska Division of InsuranceDistrict of Columbia
- Waiting
- N/A
- Cooling-off
- N/A
- Waiting
- 2 years
- Cooling-off
- 15 days
Dual oversight: DFS (brokers) and OIR (providers)
Florida Department of Financial ServicesGeorgia
- Waiting
- 2 years
- Cooling-off
- 15 days
Idaho
- Waiting
- 2 years
- Cooling-off
- 20 days
Non-standard 20-day rescission variant
Idaho Department of InsuranceKentucky
- Waiting
- 2 years
- Cooling-off
- 30 days
Mandatory insurer-disclosure state
Kentucky Department of InsuranceMaine
- Waiting
- 2 years
- Cooling-off
- 30 days
Mandatory insurer-disclosure state
Maine Bureau of InsuranceMichigan
- Waiting
- 2 years
- Cooling-off
- 15 days
Viatical settlements only (terminally/chronically ill)
Michigan Department of Insurance and Financial ServicesMinnesota
- Waiting
- 4 years
- Cooling-off
- 15 days
Unique 4-year waiting period
Minnesota Department of CommerceMissouri
- Waiting
- N/A
- Cooling-off
- N/A
Nebraska
- Waiting
- 5 years
- Cooling-off
- 60 days
NAIC-model state
Nebraska Department of InsuranceNew Hampshire
- Waiting
- 5 years
- Cooling-off
- 30 days
Mandatory insurer-disclosure state; NAIC-model 5-year wait
New Hampshire Insurance DepartmentNew Jersey
- Waiting
- 2 years
- Cooling-off
- 30 days
New Mexico
- Waiting
- 2 years
- Cooling-off
- 15 days
Viatical settlements only
New Mexico Office of Superintendent of Insurance- Waiting
- 2 years
- Cooling-off
- 15 days after proceeds
NYDFS registers LE providers (Reg. 198); rescission measured from receipt of proceeds
New York Department of Financial ServicesNorth Carolina
- Waiting
- 2 years
- Cooling-off
- 10 business days
Unique NC rescission: 10 business days after proceeds
North Carolina Department of InsuranceNorth Dakota
- Waiting
- 5 years
- Cooling-off
- 60 days
NAIC-model state
North Dakota Insurance DepartmentOhio
- Waiting
- 5 years
- Cooling-off
- 15 days
Codified under ORC Chapter 3916
Ohio Department of InsuranceOregon
- Waiting
- 5 years
- Cooling-off
- 60 days
Mandatory insurer-disclosure state
Oregon Division of Financial Regulation- Waiting
- 2 years
- Cooling-off
- 30 days
Active filial responsibility enforcement (Pittas case)
Pennsylvania Insurance DepartmentPuerto Rico
- Waiting
- 2 years
- Cooling-off
- 15 days
Rhode Island
- Waiting
- 2 years
- Cooling-off
- 15 days
South Carolina
- Waiting
- N/A
- Cooling-off
- N/A
South Dakota
- Waiting
- N/A
- Cooling-off
- N/A
Tennessee
- Waiting
- 2 years
- Cooling-off
- 30 days
- Waiting
- 2 years
- Cooling-off
- 15 days
No state income tax on proceeds; community property state
Texas Department of InsuranceVermont
- Waiting
- 5 years
- Cooling-off
- 30 days
NAIC-model 5-year wait
Vermont Department of Financial RegulationWashington
- Waiting
- 2 years
- Cooling-off
- 15 days
Mandatory insurer-disclosure state
Washington Office of the Insurance CommissionerWest Virginia
- Waiting
- 5 years
- Cooling-off
- 60 days
NAIC-model state
West Virginia Offices of the Insurance CommissionerWisconsin
- Waiting
- 5 years
- Cooling-off
- 30 days
Mandatory insurer-disclosure state; NAIC-model 5-year wait
Wisconsin Office of the Commissioner of InsuranceWhere the State Rules Come From
Most state life settlement statutes follow one of two model acts developed by national policy bodies. Understanding which model your state adopted tells you a lot about the waiting period, rescission rights, and disclosure structure you'll see in practice.
NAIC Viatical Settlements Model Act (MDL-697)
Originally adopted by the National Association of Insurance Commissioners in 1993, significantly revised June 2007. Key features: 5-year waiting period before a policy can be settled, 60-day rescission period (or 30 days after receipt of proceeds), biennial continuing education for brokers, and comprehensive anti-fraud provisions. Adopted by roughly 12 states.
NCOIL Life Settlements Model Act
Originally adopted by the National Council of Insurance Legislators in November 2000, significantly amended November 2007. Key features: 2-year waiting period (matching the standard contestability period), 15-day rescission period, explicit STOLI definitions and prohibitions, and 18 comprehensive sections covering licensing through fraud prevention. Adopted by roughly 20 states.
Both models require mandatory disclosures to sellers, anti-fraud plan submission by licensees, broker fiduciary duty to the seller, escrow requirements, and privacy protections subject to Gramm-Leach-Bliley Act requirements. States that adopt neither model (Alabama, Missouri, South Carolina, South Dakota, Wyoming, and DC) treat life settlements as general insurance transactions without settlement-specific rules.
Six States Require Insurers to Tell You About Life Settlements
Six states have enacted mandatory insurer-disclosure statutes that require insurance carriers to inform policyholders about the life settlement option before allowing a policy to lapse or be surrendered:
In these states, when you contact your insurance company to lapse, surrender, or non-pay a policy, the carrier is legally obligated to tell you that a life settlement may be an alternative. In every other state, insurance companies have no such obligation, and most will not volunteer the information.
Sources
- National Association of Insurance Commissioners (NAIC) Life Settlements Topic Page: Regulatory framework, the NAIC Viatical Settlements Model Act (MDL-697), and state-by-state adoption tracking.
- National Council of Insurance Legislators (NCOIL): NCOIL Life Settlements Model Act and its state-level adoption patterns.
- Life Insurance Settlement Association (LISA): State-by-state regulatory tracking and consumer education materials.
- Individual state insurance departments: Each DOI link in the table above is the primary authority for its state's current rules.
State Life Settlement Rules FAQ
Is a life settlement legal in every state?
Life settlements are legal in every U.S. state, but only 43 states plus Puerto Rico have enacted settlement-specific statutes. The other 6 states (Alabama, Missouri, South Carolina, South Dakota, Wyoming) plus the District of Columbia treat life settlements as general insurance transactions without settlement-specific rules. Michigan and New Mexico regulate only viatical settlements for terminally or chronically ill insureds.
How many states require a 2-year waiting period before a life settlement?
Roughly 30 states follow the NCOIL model and align the life settlement waiting period with the standard 2-year contestability period. 11 states follow the NAIC model's 5-year waiting period: Delaware, Iowa, Ohio, Oregon, Nevada, Vermont, Wisconsin, New Hampshire, Nebraska, North Dakota, and West Virginia. Minnesota uniquely requires 4 years.
What is the difference between the NAIC and NCOIL model acts?
The NAIC Viatical Settlements Model Act (MDL-697) includes a 5-year waiting period, 60-day rescission, and strong anti-fraud provisions. The NCOIL Life Settlements Model Act includes a 2-year waiting period, 15-day rescission, and explicit STOLI prohibitions. Approximately 12 states follow NAIC and 20 follow NCOIL; the rest use variations.
Which states require insurers to disclose life settlement options?
Six states require insurance carriers to inform policyholders about the life settlement option before allowing a policy to lapse or be surrendered: Washington, Wisconsin, Oregon, Maine, Kentucky, and New Hampshire. In every other state, insurance companies have no such obligation.
How do I know if my state life settlement broker is licensed?
Every state DOI maintains a public license lookup. Start with the DOI link for your state in the grid above and search by the broker's or provider's name or license number. A legitimate license will be active and specifically authorized for life settlement (or viatical settlement) brokerage.
Selling a policy in one of these states?
Start with a free estimate. We'll verify your state's rules apply cleanly to your situation before any work begins.