State Codes and Statutes
Statutes > Connecticut > Title38a > Chap700b > Sec38a-465gSec. 38a-465g. Prerequisites to a life settlement contract wherein insured is terminally or chronically ill. Medical release and confidentiality of medical information. Verification of coverage. Notice to insurer. Change of ownership or beneficiary. Rescission. Escrow agent or trustee. Broker fee calculation and disclosure of compensation. Prohibitions. Exemptions. (a) Before entering into a life settlement contract with any owner of a policy wherein the insured is terminally ill or chronically ill, a provider shall obtain:
(1) If the owner is the insured, a written statement from a licensed attending physician that the owner is of sound mind and under no constraint or undue influence to enter into the settlement contract; and
(2) A document in which the insured consents to the release of the insured's medical records to a provider, broker or insurance producer, and, if the policy was issued less than two years from the date of application for a settlement contract, to the insurance company that issued the policy.
(b) The insurer shall respond to a request for verification of coverage submitted by a provider, broker or life insurance producer on a form approved by the commissioner not later than thirty calendar days after the date the request was received. The insurer shall complete and issue the verification of coverage or indicate in which respects it is unable to respond. In its response, the insurer shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation regarding the validity of the policy.
(c) Prior to or at the time of execution of the settlement contract, the provider shall obtain a witnessed document in which the owner consents to the settlement contract, represents that the owner has a full and complete understanding of the settlement contract, that the owner has a full and complete understanding of the benefits of the policy, acknowledges that the owner is entering into the settlement contract freely and voluntarily and, for persons with a terminal or chronic illness or condition, acknowledges that the insured has a terminal or chronic illness or condition and that the terminal or chronic illness or condition was diagnosed after the life insurance policy was issued.
(d) If a broker or life insurance producer performs any of the activities required of the provider under this section, the provider shall be deemed to have fulfilled the requirements of this section.
(e) If a broker performs the verification of coverage activities required of the provider, the provider shall be deemed to have fulfilled the requirements of subsection (a) of section 38a-465f.
(f) The insurer shall not unreasonably delay effecting change of ownership or beneficiary with any life settlement contract lawfully entered into in this state or with a resident of this state.
(g) Not later than twenty days after an owner executes the life settlement contract, the provider shall give written notice to the insurer that issued the policy that the policy has become subject to a life settlement contract. The notice shall be accompanied by the documents set forth in subsection (c) of section 38a-465h.
(h) All medical information solicited or obtained by any person licensed pursuant to this part shall be subject to applicable provisions of law relating to the confidentiality of medical information.
(i) Each life settlement contract entered into in this state shall provide that the owner may rescind the contract not later than fifteen days from the date it is executed by all parties thereto. Such rescission exercised by the owner shall be effective only if both notice of rescission is given to the provider and the owner repays all proceeds and any premiums, loans and loan interest paid by the provider within the rescission period. A failure to provide written notice of the right of rescission shall toll the period of such right until thirty days after the written notice of the right of rescission has been given. If the insured dies during the rescission period, the contract shall be deemed to have been rescinded, subject to repayment by the owner or the owner's estate of all proceeds and any premiums, loans and loan interest to the provider.
(j) Not later than three business days after the date the provider receives the documents from the owner to effect the transfer of the insurance policy, the provider shall pay or transfer the proceeds of the settlement into an escrow or trust account managed by a trustee or escrow agent in a state or federally-chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation. Not later than three business days after receiving acknowledgment of the transfer of the insurance policy from the issuer of the policy, said trustee or escrow agent shall pay the settlement proceeds to the owner.
(k) Failure to tender the life settlement contract proceeds to the owner within the time set forth in section 38a-465f shall render the viatical settlement contract voidable by the owner for lack of consideration until the time such consideration is tendered to, and accepted by, the owner.
(l) Any fee paid by a provider, party, individual or an owner to a broker in exchange for services provided to the owner pertaining to a life settlement contract shall be computed as a percentage of the offer obtained and not as a percentage of the face value of the policy. Nothing in this section shall be construed to prohibit a broker from reducing such broker's fee below such percentage.
(m) Each broker shall disclose to the owner anything of value paid or given to such broker in connection with a life settlement contract concerning the owner.
(n) No person at anytime prior to, or at the time of, the application for or issuance of a policy, or during a two-year period commencing with the date of issuance of the policy, shall enter into a life settlement contract regardless of the date the compensation is to be provided and regardless of the date the assignment, transfer, sale, devise, bequest or surrender of the policy is to occur. This prohibition shall not apply if the owner certifies to the provider that:
(1) The policy was issued upon the owner's exercise of conversion rights arising out of a group or individual policy, provided the total of the time covered under the conversion policy plus the time covered under the prior policy is not less than twenty-four months. The time covered under a group policy must be calculated without regard to a change in insurance carriers, provided the coverage has been continuous and under the same group sponsorship; or
(2) The owner submits independent evidence to the provider that one or more of the following conditions have been met within said two-year period: (A) The owner or insured is terminally ill or chronically ill; (B) the owner or insured disposes of the owner or insured's ownership interests in a closely held corporation, pursuant to the terms of a buyout or other similar agreement in effect at the time the insurance policy was initially issued; (C) the owner's spouse dies; (D) the owner divorces his or her spouse; (E) the owner retires from full-time employment; (F) the owner becomes physically or mentally disabled and a physician determines that the disability prevents the owner from maintaining full-time employment; or (G) a final order, judgment or decree is entered by a court of competent jurisdiction on the application of a creditor of the owner, adjudicating the owner bankrupt or insolvent, or approving a petition seeking reorganization of the owner or appointing a receiver, trustee or liquidator to all or a substantial part of the owner's assets.
(o) Copies of the independent evidence required by subdivision (2) of subsection (n) of this section shall be submitted to the insurer when the provider submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter of attestation from the provider that the copies are true and correct copies of the documents received by the provider. Nothing in this section shall prohibit an insurer from exercising its right to contest the validity of any policy.
(p) If, at the time the provider submits a request to the insurer to effect the transfer of the policy to the provider, the provider submits a copy of independent evidence of subparagraph (A) of subdivision (2) of subsection (n) of this section, such copy shall be deemed to establish that the settlement contract satisfies the requirements of this section.
(P.A. 97-202, S. 9, 18; P.A. 99-145, S. 9, 10, 23; P.A. 03-152, S. 7; P.A. 08-175, S. 8.)
History: P.A. 97-202 effective January 1, 1998; P.A. 99-145 amended Subsecs. (d) and (h) to delete references to Secs. 38a-11(a) and 38a-816(19), effective June 8, 1999; P.A. 03-152 amended Subsec. (a) by redesignating existing Subdivs. (1) and (2) as Subdiv. (1)(A) and (B), rewriting Subdiv. (1)(B) re required consent forms, deleting former Subdiv. (3) re witnessed document and adding new Subdivs. (2) to (6) re notice, copies of documents, verification of coverage, witnessed documents, and deemed fulfillment of requirements of section, added new Subsec. (b) re confidentiality of medical information, redesignated existing Subsec. (b) as new Subsec. (c) and added provision therein re death of the insured during the rescission period, added new Subsec. (d) re purchaser's right to rescind, added new Subsec. (e) re sending executed documents to independent escrow agent, added new Subsec. (f) re voidability of contract for failure to tender consideration, deleted former Subsecs. (c), (d) and (h) re deposit of documents, voiding of contract if proceeds not received and limit on commissioner's authority to determine the amount paid re contract, redesignated existing Subsecs. (e), (f), (g), (i) and (j) as new Subsecs. (g), (h), (i), (j) and (k), respectively, amended new Subsec. (g) to delete "or viatical settlement agent", amended new Subsec. (i) to reference Sec. 38a-465f and provide that viatical settlement providers and brokers be responsible for the actions of their authorized representatives, and made technical changes; P.A. 08-175 replaced provisions re viatical settlement with provisions re life settlement and made technical and conforming changes, amended Subsec. (a) by redesignating existing Subdivs. (1)(A) and (1)(B) as Subdivs. (1) and (2), deleting existing Subdivs. (2) and (3), and redesignating existing Subdivs. (4) to (6) as new Subsecs. (b) to (d), redesignated existing Subsecs. (b) and (c) as new Subsecs. (h) and (i), inserted new Subsec. (e) re verification of coverage activities performed by a broker on behalf of a provider, inserted new Subsec. (f) re delay in effecting change of ownership or beneficiary, inserted new Subsec. (g) re notice of change of policy to life settlement contract given to insurer by provider, deleted former Subsec. (d) re right to rescind, redesignated existing Subsec. (e) as new Subsec. (j) and amended same by deleting provision directing provider to instruct viator to send executed documents to independent escrow agent and extending period in which proceeds must be paid from two days to three days, redesignated existing Subsec. (f) as new Subsec. (k), deleted former Subsecs. (g) to (k), added Subsec. (l) re computation of broker fees, added Subsec. (m) re disclosure of broker to owner of anything of value given or paid to broker, and added Subsecs. (n) to (p) re two-year prohibition on entering into life settlement contract and exemptions from prohibition.
