Sec. 38a-465f. Required disclosures.
Sec. 38a-465f. Required disclosures. (a) The provider or broker shall provide, in
writing, in a separate document that is signed by the owner and provider, the following
disclosures to the owner not later than the date the life settlement contract is signed by
all parties. The disclosure document shall contain 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 the 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." The written disclosures shall
be provided in a separate document that is signed by the owner and the provider and
shall provide at least the following disclosures:
(1) That there are possible alternatives to life settlement contracts including, but
not limited to, accelerated death benefits offered by the issuer of the life insurance policy;
(2) That some or all of the proceeds of a life settlement contract may be taxable,
and assistance should be sought from a professional tax advisor;
(3) That receipt of the life settlement contract proceeds may adversely affect the
recipient's eligibility for public assistance or other government benefits or entitlements,
and advice should be obtained from the appropriate agencies;
(4) That the owner has the right to rescind a life settlement contract for fifteen
calendar days after the date such contract is executed by all parties and the owner has
received the disclosures specified herein. 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. If the insured dies during the rescission period, the settlement contract shall be deemed to have been rescinded, subject to repayment by the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;
(5) That proceeds from the life settlement contract may be subject to the claims of
creditors;
(6) 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) 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 assistance should be sought from
a financial advisor;
(8) That the insured may be contacted by either the provider or broker or its authorized representative for the purpose of determining the insured's health status or to verify
the insured's address. This contact is limited to 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;
(9) The amount and method of calculating the compensation paid or to be paid to
the broker or to any other person acting for the owner in connection with the transaction,
wherein the term compensation includes anything of value paid or given;
(10) The date by which the funds will be available to the owner and the transmitter
of the funds;
(11) 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;
(12) 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 affiliation, if any, between the provider and the issuer of the insurance
policy to be settled;
(14) That a broker represents the owner exclusively, and not the insurer, 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;
(15) The name, address and telephone number of the provider;
(16) 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
(17) That a change of ownership could 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 an owner by a provider, including any affiliations or contractual
arrangements between the provider and the broker. Failure to provide the disclosures
or rights set forth in this section shall be deemed an unfair practice pursuant to section
38a-816.
(c) A broker shall provide the owner and the provider with at least the following
disclosures not 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 said 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 section,
"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) That the failure to provide the disclosures or rights described in this section shall
be deemed an unfair practice in violation of section 38a-815.
(P.A. 97-202, S. 8, 18; P.A. 98-27, S. 13; P.A. 99-104, S. 6; P.A. 03-152, S. 6; P.A. 08-175, S. 7.)
History: P.A. 97-202 effective January 1, 1998; P.A. 98-27 inserted "That" at the beginning of Subdivs. (2) to (6),
inclusive; P.A. 99-104 added Subdiv. (7) re disclosure that funds will be sent to viator within two business days after
settlement, and added Subdiv. (8) re disclosure that entering into viatical settlement contract may effect other rights or
benefits and that assistance should be sought from a financial advisor; P.A. 03-152 substantially revised existing provisions
and designated same as Subsec. (a), and added Subsecs. (b) to (f), inclusive, re required disclosures; P.A. 08-175 amended
Subsec. (a) by deleting provisions re viatical settlement and adding provisions re life settlement, making conforming
changes, specifying disclosures be provided in a separate document signed by owner and provider, extending period during
which proceeds must be sent to owner from two days to three days, deleting former Subdiv. (4) and renumbering existing
Subdivs. (5) to (9) as new Subdivs. (4) to (8), and adding Subdivs. (9) to (17) re additional required disclosures, deleted
former Subsecs. (b) to (f) and added new Subsec. (b) re conspicuous display of disclosure and new Subsec. (c) re required
disclosures by broker to owner and provider.