PART IV.  DISCLOSURES AND GENERAL PROCEDURES

 

[§431E-31]  Disclosures to owners.  (a) The provider shall provide in writing, in a separate document that is signed bythe owner and provider, the following information to the owner no later thanthe date the life settlement contract is signed by all parties:

(1)  The fact that possible alternatives to lifesettlement contracts exist, including but not limited to accelerated benefitsoffered by the issuer of the policy;

(2)  The fact that some or all of the proceeds of alife settlement contract may be taxable and that assistance should be soughtfrom a professional tax advisor;

(3)  The fact that the proceeds from a life settlementcontract could be subject to the claims of creditors;

(4)  The fact that receipt of proceeds from a lifesettlement contract may adversely affect the recipients' eligibility for publicassistance or other government benefits or entitlements and that advice shouldbe obtained from the appropriate agencies;

(5)  The fact that the owner has a right to terminatea life settlement contract within fifteen days of the date it is executed byall parties and the owner has received the disclosures contained herein. Rescission, if exercised by the owner, is effective only if both notice of therescission is given, and the owner repays all proceeds and any premiums, loans,and loan interest paid on account of the provider within the rescissionperiod.  If the insured dies during the rescission period, the contract shallbe deemed to have been rescinded subject to repayment by the owner or the owner'sestate of all proceeds and any premiums, loans, and loan interest to theprovider;

(6)  The fact that proceeds will be sent to the ownerwithin three business days after the provider has received the insurer or groupadministrator's acknowledgment that ownership of the policy or interest in thecertificate has been transferred and the beneficiary has been designated inaccordance with the terms of the life settlement contract;

(7)  The fact that entering into a life settlementcontract may cause other rights or benefits, including conversion rights andwaiver of premium benefits that may exist under the policy or certificate, tobe forfeited by the owner and that assistance should be sought from a professionalfinancial advisor;

(8)  The amount and method of calculating thecompensation paid or to be paid to the broker, or any other person acting forthe owner in connection with the transaction, wherein the term compensationincludes anything of value paid or given;

(9)  The date by which the funds will be available tothe owner and the transmitter of the funds;

(10)  The fact that the commissioner shall requiredelivery of a Buyer's Guide or a similar consumer advisory package in the formprescribed by the commissioner to owners during the solicitation process;

(11)  The following language:

 

"All medical, financial or personalinformation solicited or obtained by a provider or broker about an insured,including the insured's identity or the identity of family members, a spouse ora significant other may be disclosed as necessary to effect the life settlementcontract between the owner and provider.  If you are asked to provide thisinformation, you will be asked to consent to the disclosure.  The informationmay be provided to someone who buys the policy or provides funds for thepurchase. You may be asked to renew your permission to share information everytwo years.";

 

(12)  The fact that the commissioner shall requireproviders and brokers to print separate signed fraud warnings on theirapplications and on their life settlement contracts as follows:

 

"Any person who knowingly presents falseinformation in an application for insurance or life settlement contract isguilty of a crime and may be subject to fines and confinement in prison.";

 

(13)  The fact that the owner may be contacted byeither the provider or broker or its authorized representative for the purposeof determining the owner's health status or to verify the owner's address; 

(14)  The affiliation, if any, between the provider andthe issuer of the policy to be settled;

(15)  That a broker represents exclusively the owner,and not the insurer or the provider or any other person, and owes a fiduciaryduty to the owner, including a duty to act according to the owner'sinstructions and in the best interest of the owner;

(16)  The name, address, and telephone number of theprovider;

(17)  The name, business address, and telephone numberof the independent third party escrow agent, and the fact that the owner mayinspect or receive copies of the relevant escrow or trust agreements ordocuments; and

(18)  The fact that a change of ownership could in thefuture limit the insured's ability to purchase future insurance on the insured'slife because there is a limit to how much coverage insurers will issue on onelife.

(b)  The written disclosures shall beconspicuously displayed in any life settlement contract furnished to the ownerby a provider, including any affiliations or contractual arrangements betweenthe provider and the broker.

(c)  A broker shall provide the owner and theprovider with at least the following disclosures no later than the date thelife settlement contract is signed by all parties.  The disclosures shall beconspicuously displayed in the life settlement contract or in a separatedocument signed by the owner and provide the following information:

(1)  The name, business address, and telephone numberof the broker;

(2)  A full, complete, and accurate description of allthe offers, counter-offers, acceptances, and rejections relating to theproposed life settlement contract;

(3)  A written disclosure of any affiliations orcontractual arrangements between the broker and any person making an offer inconnection with the proposed life settlement contract;

(4)  The name of each broker who receives compensationand the amount of compensation received by that broker, which compensationincludes anything of value paid or given to the broker in connection with thelife settlement contract;

(5)  A complete reconciliation of the gross offer orbid by the provider to the net amount of proceeds or value to be received bythe owner.  For the purpose of this paragraph, "gross offer" or "bid"means the total amount or value offered by the provider for the purchase of oneor more life insurance policies, inclusive of commissions and fees; and

(6)  The fact that the failure to provide thedisclosures or rights described in this section shall be deemed an unfair tradepractice under section 480-2. [L 2008, c 177, pt of §1]