Michigan regulates life settlements through Michigan insurance law — note that Michigan regulates viatical settlements (sales by terminally or chronically ill insureds) but has no comprehensive life settlement act, so statutory protections are narrower than in most states, administered by the Michigan Department of Insurance and Financial Services. Michigan is one of only two states (with New Mexico) that regulates viatical settlements only — life settlements by healthy seniors are not explicitly regulated, so Michigan residents have fewer statutory protections than in most states. The framework exists to protect the policyholder: licensing, mandatory disclosures, rescission rights, and anti-fraud rules all sit on your side of the table.
This page explains each protection and how to use it.
In This Article
The Legal Foundation
The right to sell a life insurance policy predates every state statute. In Grigsby v. Russell, 222 U.S. 149 (1911), the U.S. Supreme Court held that a life insurance policy is personal property with “the ordinary characteristics of property,” freely assignable by its owner. Modern state regulation doesn’t grant the right to sell — it structures how the sale must happen so the policyholder is protected. Michigan’s rules follow the pattern set by the NAIC Life Settlements Model Act, the national template most states have adopted in some form.
Who Must Be Licensed in Michigan
Michigan is one of only two states (with New Mexico) that regulates viatical settlements only — life settlements by healthy seniors are not explicitly regulated, so Michigan residents have fewer statutory protections than in most states. Licensing gives the Michigan Department of Insurance and Financial Services enforcement power: a licensee that violates disclosure, privacy, or fair-dealing rules can lose the ability to operate in the state. It also gives you a verification tool — before signing anything, confirm every party’s status at https://www.michigan.gov/difs. A refusal or excuse when you ask for license details is a transaction-ending red flag.
Disclosures You’re Entitled To
Under NAIC-based frameworks, before a settlement contract is signed the policyholder must be told, in writing:
- The alternatives to a settlement — surrender values, accelerated death benefits, nonforfeiture options
- That the death benefit will be lost to the original beneficiaries
- Broker compensation — amount and source
- That proceeds may be taxable and may affect eligibility for means-tested public benefits such as Medicaid
- How medical and personal information will be used and shared
- The rescission right and its deadline
Keep every disclosure document. They are the paper trail your rights hang on. See our overview of consumer protections in life settlements.
| Protection | What It Means in Michigan |
|---|---|
| Regulator | Michigan Department of Insurance and Financial Services |
| Governing law | Michigan insurance law — note that Michigan regulates viatical settlements (sales by terminally or chronically ill insureds) but has no comprehensive life settlement act, so statutory protections are narrower than in most states |
| Licensing | Michigan is one of only two states (with New Mexico) that regulates viatical settlements only — life settlements by healthy seniors are not explicitly regulated, so Michigan residents have fewer statutory protections than in most states. |
| Rescission | Michigan has no comprehensive life settlement statute, so no statutory rescission period applies to standard life settlements — contract terms control, which makes careful review before signing especially important |
| STOLI | Prohibited; 2-year in-force rule applies |
Rescission: Your Right to Undo the Sale
Rescission is the strongest single protection in the framework: a window after closing during which you can reverse the transaction entirely by returning the proceeds. In Michigan: Michigan has no comprehensive life settlement statute, so no statutory rescission period applies to standard life settlements — contract terms control, which makes careful review before signing especially important. Rescission also typically applies automatically if the insured dies during the window — the contract unwinds and the death benefit is paid to the original beneficiaries, less amounts repaid. Details and state comparisons in our rescission rights guide.
STOLI and Anti-Fraud Rules
Stranger-originated life insurance — coverage manufactured purely so investors can buy it — is prohibited in every regulated state. This is why the 2-year in-force requirement exists: it separates legitimate policyholders selling coverage they bought for real insurance purposes from schemes that originate policies to flip. If anyone ever proposes that you take out a new policy in order to sell it, walk away — that proposal itself is the fraud. Background in our STOLI explainer.
Filing a Complaint
If a broker or provider misleads you, pressures you, mishandles your information, or fails to deliver required disclosures, the Michigan Department of Insurance and Financial Services accepts consumer complaints and investigates licensees. Document everything — names, dates, copies of paperwork — and file through the regulator’s website. Complaint histories are also a useful pre-screening tool: check before you engage, not after.
Frequently Asked Questions
Are life settlements regulated in Michigan?
Yes. Michigan regulates life settlements under Michigan insurance law — note that Michigan regulates viatical settlements (sales by terminally or chronically ill insureds) but has no comprehensive life settlement act, so statutory protections are narrower than in most states, with the Michigan Department of Insurance and Financial Services handling licensing, disclosure enforcement, and consumer complaints. The framework follows the NAIC Life Settlements Model Act pattern used across most of the country.
How do I check if a life settlement company is licensed in Michigan?
Search the Michigan Department of Insurance and Financial Services’s license lookup at https://www.michigan.gov/difs, or call the regulator directly. Verify both the provider (buyer) and any broker involved. Legitimate firms expect this and will hand you their license details unprompted.
What is the rescission period for a life settlement in Michigan?
Michigan has no comprehensive life settlement statute, so no statutory rescission period applies to standard life settlements — contract terms control, which makes careful review before signing especially important During the window you can reverse the sale by returning the proceeds. If the insured dies during the rescission window, the contract typically unwinds automatically so the original beneficiaries receive the death benefit.
What disclosures must I receive before selling my policy?
Written disclosure of your alternatives, the loss of the death benefit to your beneficiaries, broker compensation, potential tax consequences, possible effects on Medicaid or other means-tested benefits, medical-privacy handling, and your rescission right. Missing disclosures are both a red flag and a regulatory violation.
Why does my policy need to be 2 years old to sell?
The in-force requirement (2 years in most states) is the anti-STOLI rule — it prevents policies from being originated purely for resale to investors. Policies older than the contestability window also carry cleaner title, which is part of why buyers require it.
Who do I contact with a complaint about a life settlement in Michigan?
The Michigan Department of Insurance and Financial Services — through its consumer services division at https://www.michigan.gov/difs. Provide contracts, disclosure documents, and correspondence. Regulators investigate licensees and can impose penalties up to license revocation.
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Related Reading
- Life Settlements Michigan
- Life Settlement Broker Michigan
- How Are Life Settlements Regulated
- Life Settlement Consumer Protections
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.