[§431E-33]  General rules.  (a)  A
provider entering into a life settlement contract with any owner of a policy,
wherein the insured is terminally or chronically ill, shall first 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 a life 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 life settlement contract, to the insurance company that
issued the policy.



The provider, broker, or its authorized
representative shall be limited to contact for the purpose of determining the
owner's health status or to verify the owner's address, once every three months
if the insured has a life expectancy of more than one year, and no more than
once per month if the insured has a life expectancy of one year or less.



(b)  The insurer shall respond to a request for
verification of coverage submitted by a provider, broker, or life insurance
producer, not later than thirty calendar days of the date the request is
received.  The request for verification of coverage shall be made on a form
approved by the commissioner.  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 at this time regarding the validity of the insurance contract.



(c)  Before or at the time of execution of the
life settlement contract, the provider shall obtain a witnessed document in
which the owner:



(1)  Consents to the life settlement contract;



(2)  Represents that the owner has a full and complete
understanding of the life settlement contract;



(3)  Represents that the owner has a full and complete
understanding of the benefits of the policy;



(4)  Acknowledges that the owner is entering into the
life settlement contract freely and voluntarily; and



(5)  For persons with a chronic or terminal illness or
condition, acknowledges that the insured has a chronic or terminal illness and
that the chronic or terminal illness or condition was diagnosed after the
policy was issued.



(d)  An insurer shall not unreasonably delay
effecting change of ownership or beneficiary in connection with any life
settlement contract lawfully entered into in this State or with a resident of
this State.



(e)  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.



(f)  If a broker performs those verification of
coverage activities required of the provider, the provider is deemed to have
performed those activities.



(g)  Within twenty days after an owner executes
the life settlement contract, the provider shall give written notice to the
insurer that issued that policy that the policy has become subject to a life
settlement contract. The notice shall be accompanied by the documents required
by section 431E-32(c).



(h)  All life settlement contracts entered into
in this State shall provide that the owner may rescind the contract on or
before fifteen days after the date it is executed by all parties thereto. 
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.



(i)  Within three business days after receipt
from the owner of documents to effect the transfer of the policy, the provider
shall pay the proceeds of the settlement to an escrow or trust account managed
by a trustee or escrow agent in a state or federally chartered financial
institution pending acknowledgment of the transfer by the issuer of the
policy.  The trustee or escrow agent shall be required to transfer the proceeds
due to the owner within three business days of acknowledgment of the transfer
from the insurer.



(j)  Failure to tender the life settlement
contract proceeds to the owner by the date disclosed to the owner shall render
the contract voidable by the owner for lack of consideration until the time the
proceeds are tendered to and accepted by the owner.  A failure to give written
notice of the right of rescission hereunder shall toll the right of rescission
until thirty days after the written notice of the right of rescission has been
given.



(k)  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, not the face value of the policy.  Nothing in this
section shall be construed as prohibiting a broker from reducing such broker's
fee below this percentage if the broker so chooses.



(l)  The broker shall disclose to the owner
anything of value paid or given to a broker and that relates to a life
settlement contract.



(m)  No person at any time 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 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 that
the total of the time covered under the conversion policy plus the time covered
under the prior policy is at least twenty-four months. The time covered under a
group policy shall be calculated without regard to a change in insurance
carriers; provided further that 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 the
two-year period:



(A)  The owner or insured is chronically or
terminally ill;



(B)  The owner or insured disposes of ownership
interests in a closely-held corporation, pursuant to the terms of a buyout or
other similar agreement in effect at the time the policy was initially issued;



(C)  The owner's spouse dies;



(D)  The owner divorces the owner's 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;



(3)  Copies of the independent evidence required by
subsection (m)(2) 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;



(4)  If the provider submits to the insurer a copy of
independent evidence required by subsection (m)(2) when the provider submits a
request to the insurer to effect the transfer of the policy to the provider,
the copy shall be deemed to establish that the life settlement contract
satisfies the requirements of this section. [L 2008, c 177, pt of §1]