38.2-6008 - General rules.
§ 38.2-6008. General rules.
A. A viatical settlement provider entering into a viatical settlementcontract shall:
1. First obtain:
a. If the viator is the insured, a written statement from a licensedattending physician that the viator is of sound mind and under no constraintor undue influence to enter into a viatical settlement contract; and
b. A document in which the insured consents to the release of his medicalrecords to a viatical settlement provider, viatical settlement broker, andthe insurance company that issued the life insurance policy covering the lifeof the insured. The consent for the release of medical records shall only beobtained for the insurance company if the life insurance policy covering theinsured was issued within 48 months of the date of the viator's applicationfor the viatical settlement contract.
2. Within 20 days after a viator executes documents necessary to transfer anyrights under an insurance policy or within 20 days of entering any agreement,option, promise or any other form of understanding, expressed or implied, toviaticate the policy, the viatical settlement provider shall give writtennotice to the insurer that issued that insurance policy that the policy hasor will become a viaticated policy. The notice shall be accompanied by thedocuments required by subdivision 3.
3. The viatical settlement provider shall deliver a copy of the medicalrelease required under subdivision 1 b of this subsection, a copy of theviator's application for the viatical settlement contract, the noticerequired under subdivision 2, and a request for verification of coverage tothe insurer that issued the life policy that is the subject of the viaticaltransaction. The verification form adopted by the NAIC shall be used unlessstandards for verification are developed by the Commission.
4. The insurer shall respond to a request for verification of coveragesubmitted on an approved form by a viatical settlement provider not laterthan 30 calendar days after the date the request is received. The insurershall complete and issue the verification of coverage to the viaticalsettlement provider or, in its response, the insurer shall indicate whether,based on the medical evidence and documents provided, the insurer intends topursue an investigation regarding possible fraud or the validity of theinsurance contract.
5. Prior to or at the time of execution of the viatical settlement contract,the viatical settlement provider shall obtain a witnessed document in whichthe viator consents to the viatical settlement contract, represents that theviator has a full and complete understanding of the viatical settlementcontract, that he has a full and complete understanding of the benefits ofthe life insurance policy, acknowledges that he is entering into the viaticalsettlement contract freely and voluntarily and, for persons who arechronically or terminally ill, acknowledges that the insured has a terminalor chronic illness and that the terminal or chronic illness or condition wasdiagnosed after the life insurance policy was issued.
6. If a viatical settlement broker performs any of these activities requiredof the viatical settlement provider, the provider is deemed to have fulfilledthe requirements of this section.
B. All medical information solicited or obtained by any licensee shall besubject to the applicable provisions of state law relating to privacy orconfidentiality of medical information.
C. All viatical settlement contracts entered into in this Commonwealth shallprovide the viator with an unconditional right to rescind the contract for atleast 15 calendar days from the receipt of the viatical settlement proceeds.If the insured dies during the rescission period, the viatical settlementcontract shall be deemed to have been rescinded, subject to repayment to theviatical settlement provider or purchaser of all viatical settlementproceeds, and any premiums, loans, and loan interest that have been paid bythe viatical settlement provider or purchaser.
D. The viatical settlement provider shall instruct the viator to send theexecuted documents required to effect the change in ownership, assignment orchange in beneficiary directly to the independent escrow agent. Within threebusiness days after the date the escrow agent receives the documents, or fromthe date the viatical settlement provider receives the documents, if theviator erroneously provides the documents directly to the provider, theprovider shall pay or transfer the proceeds of the viatical settlement intoan escrow or trust account maintained in a state or federally-charteredfinancial institution whose deposits are insured by the Federal DepositInsurance Corporation. Upon payment of the settlement proceeds into theescrow account, the escrow agent shall deliver the original change inownership, assignment, or change in beneficiary forms to the viaticalsettlement provider or related provider trust. Upon the escrow agent'sreceipt of the acknowledgment of the properly completed transfer ofownership, assignment, or designation of beneficiary from the insurancecompany, the escrow agent shall pay the settlement proceeds to the viator.
E. Failure to tender consideration to the viator for the viatical settlementcontract within the time disclosed pursuant to subdivision A 6 of § 38.2-6007renders the viatical settlement contract voidable by the viator for lack ofconsideration until the time consideration is tendered to and accepted by theviator.
F. Contacts with the insured for the purpose of determining the health statusof the insured by the viatical settlement provider or viatical settlementbroker after the viatical settlement has occurred shall only be made by theviatical settlement provider or broker licensed in this Commonwealth or itsauthorized representatives and shall be limited to once every three monthsfor insureds with a life expectancy of more than one year, and to no morethan once per month for insureds with a life expectancy of one year or less.The provider or broker shall explain the procedure for these contacts at thetime the viatical settlement contract is entered into. The limitations setforth in this subsection shall not apply to any contacts with an insured forreasons other than determining the insured's health status. Viaticalsettlement providers and viatical settlement brokers shall be responsible forthe actions of their authorized representatives.
(2003, c. 717.)