PART V. MISCELLANEOUS PROVISIONS

 

[§431E-41]  Prohibited practices.  (a) It is unlawful for any person to:

(1)  Enter into a life settlement contract if theperson knows or reasonably should have known that the policy was obtained bymeans of a false, deceptive, or misleading application for such policy;

(2)  Engage in any transaction, practice, or course ofbusiness if the person knows or reasonably should have known that the intentwas to avoid the notice requirements of this chapter;

(3)  Engage in any fraudulent act or practice inconnection with any transaction relating to any life settlement contractinvolving an owner who is a resident of this State;

(4)  Issue, solicit, market, or otherwise promote thepurchase of a policy for the purpose of or with an emphasis on settling thepolicy;

(5)  Enter into a premium finance agreement with anyperson or agency, or any person affiliated with the person or agency, pursuantto which the person shall receive any proceeds, fees, or other consideration,directly or indirectly, from the policy or owner of the policy or any otherperson with respect to the premium finance agreement or any life settlementcontract or other transaction related to such policy that are in addition tothe amounts required to pay the principal, interest, and service chargesrelated to policy premiums pursuant to the premium finance agreement orsubsequent sale of such agreement; provided that any payments, charges, fees orother amounts in addition to the amounts required to pay the principal,interest, and service charges related to policy premiums paid under the premiumfinance agreement shall be remitted to the original owner of the policy or tothe owner's estate if the owner [is] not living at the time of thedetermination of the overpayment;

(6)  With respect to any policy or life settlementcontract and a broker, knowingly solicit an offer from, effectuate a lifesettlement contract with or make a sale to any provider, financing entity, orrelated provider trust that is controlling, controlled by, or under commoncontrol with such broker;

(7)  With respect to any policy or life settlementcontract and a provider, knowingly enter into a life settlement contract withan owner, if, in connection with such life settlement contract, anything ofvalue will be paid to a broker that is controlling, controlled by, or undercommon control with such provider or the financing entity or related providertrust that is involved in such life settlement contract;

(8)  With respect to a provider, enter into a lifesettlement contract unless the life settlement contract promotional,advertising, and marketing materials, as may be prescribed by rule, have beenfiled with the commissioner.  In no event shall any marketing materialsexpressly reference that the insurance is "free" for any period oftime.  The inclusion of any reference in the marketing materials that wouldcause an owner to reasonably believe that the insurance is free for any periodof time shall be considered a violation of this chapter;

(9)  With respect to any life insurance producer,insurance company, broker, or provider, make any statement or representation tothe applicant or policyholder in connection with the sale or financing of apolicy to the effect that the insurance is free or without cost to thepolicyholder for any period of time unless provided in the policy;

(10)  Knowingly and intentionally interfere with theenforcement of the provisions of this chapter or investigations of suspected oractual violations of this chapter; and

(11)  With respect to a person in the business of lifesettlements, knowingly or intentionally permit any person convicted of a felonyinvolving dishonesty or breach of trust to participate in the business of lifesettlements.

(b)  A violation of this section shall bedeemed a fraudulent life settlement act. [L 2008, c 177, pt of §1]