§ 27-72-9 - Disclosures to owners. [Effective July 1, 2010.].
SECTION 27-72-9
§ 27-72-9 Disclosures to owners.[Effective July 1, 2010.]. – (a) The provider or broker shall provide in writing, in a separate documentthat is signed by the owner, the following information to the owner no laterthan the date of application for a life settlement contract:
(1) The fact that possible alternatives to life settlementcontracts exist, including, but not limited to, accelerated benefits offered bythe issuer of the life insurance policy;
(2) The fact that some or all of the proceeds of a lifesettlement contract may be taxable and that assistance should be sought from aprofessional 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 life settlementcontract may adversely affect the recipients' eligibility for public assistanceor other government benefits or entitlements and that advice should be obtainedfrom the appropriate agencies;
(5) The fact that the owner has a right to terminate a lifesettlement contract within fifteen (15) days of the date it is executed by allparties 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within the rescission period.If the insured dies during the rescission period, the contract shall be deemedto have been rescinded subject to repayment by the owner or the owner's estateof all proceeds and any premiums, loans, and loan interest to the provider;
(6) The fact that proceeds will be sent to the owner withinthree (3) business days after the provider has received the insurer or groupadministrator's acknowledgement 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 settlement contractmay cause other rights or benefits, including conversion rights and waiver ofpremium benefits that may exist under the policy or certificate of a grouppolicy to be forfeited by the owner and that assistance should be sought from aprofessional financial advisor;
(8) The date by which the funds will be available to theowner and the transmitter of the funds;
(9) The fact that the commissioner shall require delivery ofa buyer's guide or a similar consumer advisory package in the form prescribedby the commissioner to owners during the solicitation process;
(10) The disclosure document shall contain the followinglanguage: "all medical, financial or personal information solicited or obtainedby a provider or broker about an insured, including the insured's identity orthe identity of family members, a spouse or a significant other, may bedisclosed as necessary to effect the life settlement contract between the ownerand provider. If you are asked to provide this information, you will be askedto consent to the disclosure. The information may be provided to someone whobuys the policy or provides funds for the purchase. You may be asked to renewyour permission to share information every two (2) years";
(11) The fact that the commissioner shall require providersand brokers to print separate signed fraud warnings on their applications andon their life settlement contracts is as follows:
"Any person who knowingly presents false information in anapplication for insurance or life settlement contract is guilty of a crime andmay be subject to fines and confinement in prison."
(12) The fact that the insured may be contacted by either theprovider or its authorized representative for the purpose of determining theinsured's health status or to verify the insured's address. This contact islimited to once every three (3) months if the insured has a life expectancy ofmore than one year, and no more than once per month if the insured has a lifeexpectancy of one year or less;
(13) The affiliation, if any, between the provider and theissuer of the insurance policy to be settled;
(14) That a broker represents exclusively the owner, and notthe insurer or the provider or any other person, and owes a fiduciary duty tothe owner, including a duty to act according to the owner's instructions and inthe best interest of the owner;
(15) The document shall include the name, address andtelephone number of the provider;
(16) The name, business address, and telephone number of theindependent third-party escrow agent, and the fact that the owner may inspector receive copies of the relevant escrow or trust agreements or documents;
(17) The fact that a change of ownership could in the futurelimit the insured's ability to purchase future insurance on the insured's lifebecause there is a limit to how much coverage insurers will issue on one life;
(b) The written disclosures shall be conspicuously displayedin any life settlement contract furnished to the owner by a provider includingany affiliations or contractual arrangements between the provider and thebroker.
(c) A broker shall provide the owner and the provider with atleast the following disclosures no later than the date the life settlementcontract is signed by all parties. The disclosures shall be conspicuouslydisplayed in the life settlement contract or in a separate document signed bythe owner and provide the following information:
(1) The name, business address and telephone number of thebroker;
(2) A full, complete and accurate description of all theoffers, counter-offers, acceptances and rejections relating to the proposedlife settlement contract;
(3) A written disclosure of any affiliations or contractualarrangements between the broker and any person making an offer in connectionwith the proposed life settlement contracts;
(4) The name of each broker who receives compensation and theamount of compensation received by that broker, which compensation includesanything of value paid or given to the broker in connection with the lifesettlement contract;
(5) A complete reconciliation of the gross offer or bid bythe provider to the net amount of proceeds or value to be received by theowner. For the purpose of this section, gross offer or bid shall mean the totalamount or value offered by the provider for the purchase of one or more lifeinsurance policies, inclusive of commissions and fees; and
(6) The failure to provide the disclosures or rightsdescribed in this section shall be deemed an unfair trade practice pursuant to§ 27-72-17.