§ 10-7-608 — Disclosures

Colorado § 10-7-608

• Jurisdiction: Colorado
• Title 10: Insurance
• Art.: Life Insurance

Text

(1) With each application for a viatical settlement
contract, a viatical settlement provider or life insurance producer shall provide the
viator with at least the following information, in a separate document signed by the
viator and the viatical settlement provider or life insurance producer, no later than
the time the application for the viatical settlement contract is signed by all parties:

(a) That there exist possible alternatives to a viatical settlement contract,
including any accelerated death benefits or policy loans offered under the viator's
life insurance policy;

(b) That some or all of the proceeds of the viatical settlement contract may
be taxable under federal income tax and state franchise and income taxes, and
assistance may be sought from a professional tax advisor;

(c) That proceeds of the viatical settlement contract may be subject to the
claims of creditors;

(d) That receipt of the proceeds of a viatical settlement contract may
adversely affect the viator's eligibility for medicaid or other government benefits or
entitlements, and advice may be obtained from the appropriate government
agencies;

(e) That the viator has the right to rescind a viatical settlement contract
before the earlier of thirty calendar days after the date upon which the viatical
settlement contract is executed by all parties or fifteen calendar days after the
receipt of the viatical settlement proceeds by the viator. Rescission, if exercised by
the viator, is effective only if both notice of the rescission is given and repayment of
all proceeds and any premiums, loans, and loan interest to the viatical settlement
provider is made within forty-five days after the end of the rescission period. If the
insured dies during the rescission period, the viatical settlement contract is deemed
to have been rescinded, subject to repayment of all viatical settlement proceeds
and any premiums, loans, and loan interest being made to the viatical settlement
provider within the rescission period.

(f) That funds must be sent to the viator within three business days after the
viatical settlement provider has received the insurer's or group administrator's
acknowledgment that ownership of the viaticated policy has been transferred and
the beneficiary has been designated;

(g) That entering into a viatical settlement contract may cause other rights
or benefits, including conversion rights and waiver of premium benefits that may
exist under the policy, to be forfeited by the viator, and that the viator may seek
assistance from an independent financial adviser;

(h) The following statement: All medical, financial, or personal information
solicited or obtained by a viatical settlement provider or a life insurance producer
about an insured, including the insured's identity or the identity of family members,
a spouse, or a significant other, may be disclosed as necessary to effect the viatical
settlement contract between the viator and the viatical settlement provider. If you
are asked to provide this information, you will be asked to consent to the disclosure.
The information may be provided to someone who buys the policy or provides funds
for the purchase. You may be asked to renew your permission to share information
every two years.

(i) That the insured may be contacted by either the viatical settlement
provider or its authorized representative for the purpose of determining the
insured's health status. This contact is limited to once every three months if the
insured has a life expectancy of more than one year, and no more than once each
month if the insured has a life expectancy of one year or less.

(2) In addition to the information described in subsection (1) of this section,
the disclosure to a viator shall include distribution of a brochure, approved by the
commissioner, describing the process of viatical settlements.

(3) No later than the date the viatical settlement contract is signed by all
parties, the viatical settlement provider shall provide the viator with at least the
following information, displayed conspicuously in the viatical settlement contract
or in a separate document signed by the viator and the viatical settlement provider:

(a) The affiliation, if any, between the viatical settlement provider and the
issuer of the insurance policy to be acquired pursuant to the viatical settlement
contract;

(b) The name, address, and telephone number of the viatical settlement
provider;

(c) If a policy to be acquired pursuant to a viatical settlement contract has
been issued as a joint policy or involves family riders or any coverage of a life other
than the insured under the policy to be acquired pursuant to a viatical settlement
contract, the viator shall be informed of the possible loss of coverage on the other
lives under the policy and advised to consult with his or her insurance producer or
the insurer issuing the policy for advice on the proposed viatical settlement
contract;

(d) The dollar amount of the current death benefit payable to the viatical
settlement provider under the policy. If known, the viatical settlement provider shall
also disclose the availability of additional guaranteed insurance benefits, the dollar
amount of accidental death and dismemberment benefits under the policy or
certificate, and the viatical settlement provider's interest in those benefits.

(e) The name, business address, and telephone number of the independent
third-party escrow agent, and the fact that the viator may inspect or receive copies
of the relevant escrow or trust agreements or documents.

(4) If the viatical settlement provider transfers ownership or changes the
beneficiary of the policy, the viatical settlement provider shall communicate the
change in ownership or beneficiary to the insured within twenty days after the
change.

Legislative History

Source: L. 2005: Entire part added, p. 1309, � 1, effective January 1, 2006.