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 by
the owner and provider, the following information to the owner no later than
the date the life settlement contract is signed by all parties:



(1)  The fact that possible alternatives to life
settlement contracts exist, including but not limited to accelerated benefits
offered by the issuer of the policy;



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



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



(4)  The fact that receipt of proceeds from a life
settlement contract may adversely affect the recipients' eligibility for public
assistance or other government benefits or entitlements and that advice should
be obtained from the appropriate agencies;



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be deemed to have been rescinded subject to repayment by the owner or the owner's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



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



(7)  The fact that entering into a life settlement
contract may cause other rights or benefits, including conversion rights and
waiver of premium benefits that may exist under the policy or certificate, to
be forfeited by the owner and that assistance should be sought from a professional
financial advisor;



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



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



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



(11)  The following language:



 



"All medical, financial or personal
information solicited or obtained by a provider or broker 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 life settlement
contract between the owner and 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.";



 



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



 



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



 



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



(14)  The affiliation, if any, between the provider and
the 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 fiduciary
duty to the owner, including a duty to act according to the owner's
instructions and in the best interest of the owner;



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



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



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



(b)  The written disclosures shall be
conspicuously displayed in any life settlement contract furnished to the owner
by a provider, including any affiliations or contractual arrangements between
the provider and the broker.



(c)  A broker shall provide the owner and the
provider with at least the following disclosures no later than the date the
life settlement contract is signed by all parties.  The disclosures shall be
conspicuously displayed in the life settlement contract or in a separate
document signed by the owner and provide the following information:



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



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



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



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



(5)  A complete reconciliation of the gross offer or
bid by the provider to the net amount of proceeds or value to be received by
the 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 one
or more life insurance policies, inclusive of commissions and fees; and



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