§ 7811 — Disclosures to owners and insureds

§ 7811. Disclosures to owners and insureds. (a) The life settlement\nprovider or life settlement broker shall provide the owner with a\nseparate written document conspicuously displaying the information and\ndisclosures required by this subsection. The separate document shall be\nsigned by the owner and life settlement provider, no later than the date\nthe life settlement contract is signed by all parties. At a minimum, the\ndocument shall state:\n (1) that there are possible alternatives to life settlement contracts,\nincluding accelerated benefits offered by the issuer of the policy;\n (2) that some or all of the proceeds of a life settlement contract may\nbe taxable and that advice should be sought from a professional tax\nadvisor;\n (3) that the proceeds from a life settlement contract could be subject\nto the claims of creditors;\n (4) that receipt of proceeds from a life settlement contract may\nadversely affect the recipients' eligibility for public assistance or\nother government benefits or entitlements and that advice should be\nobtained from the appropriate agencies;\n (5) that the owner has a right to rescind a life settlement contract\nfrom the time of execution of the contract until fifteen days after the\nreceipt of the life settlement proceeds by the owner;\n (6) that proceeds will be sent to the owner within three business days\nafter the life settlement provider has received the insurer or group\nadministrator's acknowledgement that ownership of the policy or interest\nin the certificate has been transferred and the beneficiary has been\ndesignated in accordance with the terms of the life settlement contract;\n (7) that entering into a life settlement contract may cause other\nrights or benefits, including conversion rights and waiver of premium\nbenefits, that may exist under the policy or certificate of a group\npolicy to be forfeited by the owner and that assistance should be sought\nfrom a professional financial advisor;\n (8) the gross offer or bid that the life settlement provider shall pay\npursuant to the life settlement contract; the net amount to be paid to\nthe owner pursuant to the life settlement contract; the name of each\nlife settlement broker, life settlement intermediary, insurance producer\nor insurance consultant that will be compensated by the life settlement\nprovider, or any affiliate, parent corporation, or subsidiary of the\nlife settlement provider; and the amount of compensation that the life\nsettlement provider, or any affiliate, parent corporation or subsidiary\nof the life settlement provider, shall provide to a life settlement\nbroker, life settlement intermediary, insurance producer or insurance\nconsultant, or any affiliate, parent corporation or subsidiary of such\nbroker, intermediary, producer, or consultant, pursuant to the life\nsettlement contract. For the purposes of this paragraph, "gross offer or\nbid" means the total amount or value offered by the life settlement\nprovider for the purchase of one or more life insurance policies,\ninclusive of commissions and fees;\n (9) the date by which the funds will be available to the owner and the\ntransmitter of the funds;\n (10) that the life settlement provider or life settlement broker is\nrequired to provide an owner during the solicitation process with a\nconsumer information booklet in a form prescribed by the superintendent,\nor other similar material, subject to the approval of the\nsuperintendent;\n (11) that the insured may be contacted by either the life settlement\nprovider or life settlement broker, or any authorized representative\nthereof, for the purpose of determining the insured's health status or\nto verify the insured's address, and that the contact shall be limited\nto once every three months if the insured has a life expectancy of more\nthan one year, and no more than once per month if the insured has a life\nexpectancy of one year or less;\n (12) any affiliations or contractual arrangements between the life\nsettlement provider and the issuer of the policy to be settled;\n (13) any affiliations or contractual arrangements with any other life\nsettlement provider, life settlement broker, life settlement\nintermediary or party financing the transaction;\n (14) that a life settlement broker represents exclusively the owner,\nand not the insurer or the life settlement provider or any other person,\nand owes a fiduciary duty to the owner, including a duty to act\naccording to the owner's instructions and in the best interest of the\nowner;\n (15) the name, business address, telephone number and e-mail address\nof the independent, third party escrow agent and that the owner has the\nright to inspect or receive copies of the relevant escrow or trust\nagreements or documents;\n (16) that a change of ownership could in the future limit the\ninsured's ability to purchase future insurance on the insured's life\nbecause there is a limit to how much coverage insurers will issue on one\nlife; and\n (17) the name, business address, telephone number and e-mail address\nof the life settlement provider.\n (b) The life settlement provider or life settlement broker shall\nprovide to the insured in a separate written document conspicuously\ndisplaying the information and disclosures required by this subsection.\nThe separate document shall be signed by the insured no later than the\ndate the life settlement contract is signed by all parties. The document\nshall:\n (1) state that the insured may be contacted by either the life\nsettlement provider or life settlement broker or any authorized\nrepresentative thereof, for the purpose of determining the insured's\nhealth status or to verify the insured's address, and that the contact\nshall be limited to once every three months if the insured has a life\nexpectancy of more than one year, and no more than once per month if the\ninsured has a life expectancy of one year or less;\n (2) state that a change of ownership could in the future limit the\ninsured's ability to purchase additional insurance on the insured's life\nbecause there is a limit to how much coverage insurers will issue on one\nlife; and\n (3) contain the following language, or such other language required by\nthe superintendent by regulation: "All medical, financial or personal\ninformation solicited or obtained by a life settlement provider or life\nsettlement broker about an insured, including the insured's identity or\nthe identity of family members, a spouse or a significant other may be\ndisclosed as necessary to effect the life settlement contract between\nthe owner and provider. If you are asked to provide this information,\nyou will be asked to consent to the disclosure. The information may be\nprovided to someone who buys the policy or provides funds for the\npurchase. You may be asked to renew your permission to share information\nevery two years".\n (c) The life settlement broker shall provide the owner with a separate\nwritten document conspicuously displaying the information and\ndisclosures required by this subsection. The separate document shall be\nsigned by the owner and life settlement broker, no later than the date\nthe life settlement contract is signed by all parties. At a minimum, the\ndocument shall state:\n (1) the name, business address, telephone number and e-mail address of\nthe life settlement broker;\n (2) a full, complete and accurate description of all the offers,\ncounter-offers, acceptances and rejections relating to the proposed life\nsettlement contract;\n (3) any affiliations or contractual arrangements with any life\nsettlement provider, other life settlement broker, life settlement\nintermediary or any financing entity;\n (4) the gross amount to be paid pursuant to the life settlement\ncontract, the net amount of the proceeds to be paid to the owner\npursuant to the life settlement contract, the amount of compensation to\nbe paid to the life settlement broker pursuant to the life settlement\ncontract, and the name of such life settlement broker. For purposes of\nthis paragraph, "gross amount to be paid" means the total amount or\nvalue to be paid by the life settlement provider for the purchase of one\nor more life insurance policies, inclusive of commissions and fees; and\n (5) a complete reconciliation of the gross offer or bid by the life\nsettlement provider to the net amount of proceeds or value to be\nreceived by the owner, provided that for the purpose of this section,\n"gross offer or bid" shall mean the total amount or value offered by the\nlife settlement provider for the purchase of one or more life insurance\npolicies, inclusive of commissions and fees.\n