§ 23-81-813 — Prohibited practices

(a) It is unlawful for any person to: (1) Enter into a life settlement contract if the person knows or reasonably should have known that the life insurance policy was obtained by means of a false, deceptive, or misleading application for the policy; (2) Engage in any transaction, practice, or course of business if the person knows or reasonably should have known that the intent was to avoid the notice requirements of this section; (3) Engage in any fraudulent act or practice in connection with any transaction relating to any settlement involving an owner who is a resident of this state; (4) Issue, solicit, market, or otherwise promote the purchase of an insurance policy for the purpose of or with an emphasis on settling the policy; (5) (A) Enter into a premium finance agreement with any person or agency or any person affiliated with the person or agency pursuant to which the person shall receive any proceeds, fees, or other consideration, directly or indirectly, from the policy or owner of the policy or any other person with respect to the premium finance agreement or any settlement contract or other transaction related to the policy that are in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums pursuant to the premium finance agreement or subsequent sale of the agreement. (B) Any payments, charges, fees, or other amounts in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums paid under the premium finance agreement shall be remitted to the original owner of the policy or to his or her estate if he or she is not living at the time of the determination of the overpayment; (6) With respect to any life settlement contract or insurance policy and a broker, knowingly solicit an offer from, effectuate a life settlement contract with, or make a sale to any provider, financing entity, or related provider trust that is controlling, controlled by, or under common control with the broker; (7) With respect to any life settlement contract or insurance policy and a provider, knowingly enter into a life settlement contract with an owner, if in connection with the life settlement contract, anything of value will be paid to a broker that is controlling, controlled by, or under common control with the provider or the financing entity or related provider trust that is involved in the life settlement contract; (8) (A) With respect to a provider, enter into a life settlement contract unless the life settlement contract promotional, advertising, and marketing materials, as may be prescribed by rule, have been filed with the Insurance Commissioner. (B) Marketing materials shall not expressly reference that the insurance is free for any period of time. (C) The inclusion of any reference in the marketing materials that would cause an owner to reasonably believe that the insurance is free for any period of time is a violation of this subchapter; or (9) With respect to any life insurance producer, insurance company, broker, or provider, make any statement or representation to the applicant or policyholder in connection with the sale or financing of a life insurance policy to the effect that the insurance is free or without cost to the policyholder for any period of time unless provided in the policy. (b) A violation of this section is a fraudulent life settlement act.

Legislative History

Acts 2009, No. 796, § 1.