31A-36-111 - Prohibited acts.
31A-36-111. Prohibited acts.
(1) An owner may not enter into a life settlement at any time before the application orissuance of a policy.
(2) An owner may not enter into a life settlement within two years after the date ofissuance of the policy to which the life settlement relates unless the owner certifies to the lifesettlement provider that one of the following is satisfied:
(a) the policy was issued upon the owner's exercise of conversion rights arising out of agroup or individual policy if:
(i) the total time covered under the conversion policy plus the time covered under theprior policy is at least 24 months; and
(ii) the time covered under a group policy, calculated without regard to any change ininsurance carriers, is continuous and under the same group sponsorship; or
(b) the owner submits to the life settlement provider independent evidence that withinthe two-year period:
(i) the owner or insured is terminally ill;
(ii) the owner or insured is chronically ill;
(iii) the spouse of the owner dies;
(iv) the owner divorces the owner's spouse;
(v) the owner retires from full-time employment;
(vi) the owner becomes physically or mentally disabled and a physician determines thatthe disability precludes the owner from maintaining full-time employment;
(vii) a final judgment or order is entered or issued by a court of competent jurisdiction,on the application of a creditor of the owner:
(A) adjudging the owner bankrupt or insolvent;
(B) approving a petition for reorganization of the owner; or
(C) appointing a receiver, trustee, or liquidator for all or a substantial part of the owner'sassets;
(viii) the owner experiences a significant decrease in income that is unexpected andimpairs the owner's reasonable ability to pay the policy premium; or
(ix) 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 isinitially issued.
(3) An insurer may not, as a condition of responding to a request for verification ofcoverage or effecting the transfer of a policy pursuant to a life settlement, require any of thefollowing to sign a form, disclosure, consent, or waiver that is not filed with the commissionerfor use in connection with a life settlement in this state:
(a) an owner;
(b) an insured;
(c) a life settlement provider; or
(d) a life settlement producer.
(4) (a) Upon receipt of a properly completed request for change of ownership orbeneficiary of a policy, an insurer shall respond in writing within 30 calendar days of the day ofreceipt with written acknowledgment:
(i) confirming that the change is effective; or
(ii) specifying the reasons why the requested change cannot be processed.
(b) An insurer may not:
(i) unreasonably delay effecting a change of ownership or beneficiary; and
(ii) otherwise seek to interfere with a life settlement lawfully entered into in this state.
(5) A person may not issue, solicit, or market the purchase of a policy for the primarypurpose of or with a primary emphasis on settling the policy.
(6) (a) Unless disclosed to an owner before the execution of a life settlement by theowner, a life settlement producer may not knowingly with respect to the life settlement solicit anoffer from, effectuate the life settlement with, or make a sale to any of the following that iscontrolling, controlled by, or under common control with the life settlement producer:
(i) a life settlement provider;
(ii) a life settlement purchaser;
(iii) a financing entity; or
(iv) a related provider trust.
(b) Unless disclosed to an owner before the execution of a life settlement by the owner,with respect to the life settlement, a life settlement provider may not knowingly enter into the lifesettlement with the owner, if, in connection with the life settlement, anything of value will bepaid to a life settlement producer that is controlling, controlled by, or under common controlwith:
(i) the life settlement provider;
(ii) the life settlement purchaser;
(iii) a financing entity; or
(iv) a related provider trust.
Amended by Chapter 355, 2009 General Session