2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 508E - VIATICAL SETTLEMENT CONTRACTS
508E.8 - DISCLOSURE TO VIATOR.

        508E.8  DISCLOSURE TO VIATOR.
         1.  With each application for a viatical settlement, a viatical
      settlement provider or viatical settlement broker shall provide the
      viator with at least the following disclosures no later than the time
      the application for the viatical settlement contract is signed by all
      parties.  The disclosures shall be provided in a separate document
      that is signed by the viator and the viatical settlement provider or
      viatical settlement broker, and shall provide all of the following
      information:
         a.  There are possible alternatives to viatical settlement
      contracts including any accelerated death benefits or policy loans
      offered under the viator's life insurance policy.
         b.  That a viatical settlement broker represents exclusively
      the viator, and not the insurer or the viatical settlement provider,
      and owes a fiduciary duty to the viator, including a duty to act
      according to the viator's instructions and in the best interest of
      the viator.
         c.  Some or all of the proceeds of the viatical settlement may
      be taxable under federal income tax and state franchise and income
      taxes, and assistance should be sought from a professional tax
      advisor.
         d.  Proceeds of the viatical settlement could be subject to
      the claims of creditors.
         e.  Receipt of the proceeds of a viatical settlement may
      adversely affect the viator's eligibility for Medicaid or other
      government benefits or entitlements, and advice should be obtained
      from the appropriate government agencies.
         f.  The viator has the right to rescind a viatical settlement
      contract before the earlier of thirty days after the date upon which
      the viatical settlement contract is executed by all parties or
      fifteen days after the viatical settlement proceeds have been paid to
      the viator, as provided in section 508E.10, subsection 3.  Recision,
      if exercised by the viator, is effective only if both notice of the
      recision is given, and the viator repays all proceeds and any
      premiums, loans, and loan interest paid on account of the viatical
      settlement within the recision period.  If the insured dies during
      the recision period, the viatical settlement contract shall be deemed
      to have been rescinded, subject to repayment by the viator or the
      viator's estate of all viatical settlement proceeds and any premiums,
      loans, and loan interest that have been paid by the viatical
      settlement provider or purchaser within sixty days of the insured's
      death.
         g.  Funds will be sent to the viator within three business
      days after the viatical settlement provider has received the
      insurer's or group administrator's written acknowledgment that
      ownership of the policy or interest in the certificate has been
      transferred and the beneficiary has been designated.
         h.  Entering into a viatical 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 viator.  Assistance should be sought from a
      financial adviser.
         i.  Disclosure to a viator shall include distribution of a
      brochure describing the process of viatical settlements.  The
      national association of insurance commissioners form for the brochure
      shall be used unless another form is developed and approved by the
      commissioner.
         j.  The disclosure document shall contain the following
      language:

         "All medical, financial, or personal information solicited or
      obtained by a viatical settlement provider or viatical settlement
      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 viatical settlement between the
      viator and the viatical settlement 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."

         k.  Following execution of a viatical contract, the insured
      may be contacted for the purpose of determining the insured's health
      status and to confirm the insured's residential or business street
      address and telephone number, or as otherwise provided in this
      chapter.  This contact shall be 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.  All such contacts shall be made only by a duly licensed
      viatical settlement provider or by the authorized representative of a
      duly licensed viatical settlement provider.
         2.  A viatical settlement provider shall provide the viator with
      at least the following disclosures no later than the date the
      viatical settlement contract is signed by all parties.  The
      disclosures shall be conspicuously displayed in the viatical
      settlement contract or in a separate document signed by the viator
      and provide all of the following information:
         a.  The affiliation, if any, between the viatical settlement
      provider and the issuer of the insurance policy to be viaticated.
         b.  The name, business address, and telephone number of the
      viatical settlement provider.
         c.  If an insurance policy to be viaticated has been issued as
      a joint policy or involves family riders or any coverage of a life
      other than the insured under the policy to be viaticated, a notice of
      the viator's possible loss of coverage on the other lives under the
      policy and to consult with the viator's insurance producer or the
      insurer issuing the policy for advice on the proposed viatical
      settlement.
         d.  The dollar amount of the current death benefit payable to
      the viatical settlement provider under the policy or certificate.  If
      known, the viatical settlement provider shall also disclose the
      availability of any additional guaranteed insurance benefits, the
      dollar amount of any accidental death and dismemberment benefits
      under the policy or certificate, and the extent to which the viator's
      interest in those benefits will be transferred as a result of the
      viatical settlement contract.
         e.  Whether the funds will be escrowed with an independent
      third party during the transfer process, and if so, provide the name,
      business address, and telephone number of the independent third-party
      escrow agent, and the fact that the viator or owner may inspect or
      receive copies of the relevant escrow or trust agreements or
      documents.
         3.  A viatical settlement broker shall provide the viator with at
      least the following disclosures no later than the date the viatical
      settlement contract is signed by all parties.  The disclosures shall
      be conspicuously displayed in the viatical settlement contract or in
      a separate document signed by the viator and provide all of the
      following information:
         a.  The name, business address, and telephone number of the
      viatical settlement broker.
         b.  A full, complete, and accurate description of all offers,
      counteroffers, acceptances, and rejections relating to the proposed
      viatical settlement contract.
         c.  Any affiliations or contractual arrangements between the
      viatical settlement broker and any person making an offer in
      connection with the proposed viatical settlement contracts.
         d.  The amount and method of calculating the broker's
      compensation.  As used in this paragraph, "compensation" includes
      anything of value paid or given to a viatical settlement broker for
      the placement of a policy.
         e.  Where any portion of the viatical settlement broker's
      compensation, as defined in paragraph "d", is taken from a
      proposed viatical settlement offer, the broker shall disclose the
      total amount of the viatical settlement offer and the percentage of
      the viatical settlement offer comprised by the viatical settlement
      broker's compensation.
         4.  If the viatical settlement provider transfers ownership or
      changes the beneficiary of the insurance policy, the viatical
      settlement provider shall communicate in writing the change in
      ownership or beneficiary to the insured within twenty days after the
      change.
         5.  A viatical settlement provider shall provide the viatical
      settlement purchaser with at least the following disclosures prior to
      the date the viatical settlement purchase agreement is signed by all
      parties.  The disclosures shall be conspicuously displayed in any
      viatical purchase contract or in a separate document signed by the
      viatical settlement purchaser and viatical settlement provider or
      viatical settlement investment agent, and shall make the following
      disclosure to the viatical settlement purchaser:
         a.  The viatical settlement purchaser will receive no returns
      including dividends and interest, until the insured dies and a death
      claim payment is made.
         b.  The actual annual rate of return on a viatical settlement
      contract is dependent upon an accurate projection of the insured's
      life expectancy, and the actual date of the insured's death.  An
      annual "guaranteed" rate of return is not determinable.
         c.  The viaticated life insurance contract should not be
      considered a liquid purchase since it is impossible to predict the
      exact timing of its maturity and the funds probably are not available
      until the death of the insured.  There is no established secondary
      market for resale of these products by the viatical settlement
      purchaser.
         d.  The viatical settlement purchaser may lose all benefits or
      may receive substantially reduced benefits if the insurer goes out of
      business during the term of the viatical investment.
         e.  The viatical settlement purchaser is responsible for
      payment of the insurance premium or other costs related to the
      policy, if required by the terms of the viatical purchase agreement.
      These payments may reduce the viatical settlement purchaser's return.
      If a party other than the viatical settlement purchaser is
      responsible for the payment, the name and address of that party also
      shall be disclosed.
         f.  The viatical settlement purchaser is responsible for
      payment of the insurance premiums or other costs related to the
      policy if the insured returns to health.  The viatical settlement
      provider shall disclose the amount of such premiums, if applicable.
         g.  The name, business address, and telephone number of the
      independent third party providing escrow services and the
      relationship to the viatical settlement broker.
         h.  The amount of any trust fees or other expenses to be
      charged to the viatical settlement purchaser shall be disclosed.
         i.  Whether the viatical settlement purchaser is entitled to a
      refund of all or part of the viatical settlement purchaser's
      investment under the viatical settlement contract if the policy is
      later determined to be null and void.
         j.  That group policies may contain limitations or caps in the
      conversion rights, that additional premiums may have to be paid if
      the policy is converted, the name of the party responsible for the
      payment of the additional premiums, and, if a group policy is
      terminated and replaced by another group policy, that there may be no
      right to convert the original coverage.
         k.  The risks associated with policy contestability including
      but not limited to the risk that the viatical settlement purchaser
      will have no claim or only a partial claim to death benefits should
      the insurer rescind the policy within the contestability period.
         l.  Whether the viatical settlement purchaser will be the
      owner of the policy in addition to being the beneficiary, and if the
      viatical settlement purchaser is the beneficiary only and not also
      the owner, the special risks associated with that status, including
      but not limited to the risk that the beneficiary may be changed or
      the premium may not be paid.
         m.  The experience and qualifications of the person who
      determines the life expectancy of the insured, including in-house
      staff, independent physicians, and specialty firms that weigh medical
      and actuarial data; the information this projection is based on; and
      the relationship of the projection maker to the viatical settlement
      provider, if any.
         n.  A brochure describing the process of investment in
      viatical settlements.  The national association of insurance
      commissioners form for the brochure shall be used unless another form
      is developed and approved by the commissioner.
         6.  A viatical settlement provider shall provide the viatical
      settlement purchaser with at least the following disclosures no later
      than at the time of the assignment, transfer, or sale of all or a
      portion of an insurance policy.  The disclosures shall be contained
      in a document signed by the viatical settlement purchaser and
      viatical settlement provider, and shall make all of the following
      disclosures to the viatical settlement purchaser:
         a.  All the life expectancy certifications obtained by the
      provider in the process of determining the price paid to the viator.

         b.  Whether premium payments or other costs related to the
      policy have been escrowed.  If escrowed, state the date upon which
      the escrowed funds will be depleted and whether the viatical
      settlement purchaser will be responsible for payment of premiums
      thereafter and, if so, the amount of the premiums.
         c.  Whether premium payments or other costs related to the
      policy have been waived.  If waived, disclose whether the viatical
      settlement purchaser will be responsible for payment of the premiums
      if the insurer that wrote the policy terminates the waiver after
      purchase and the amount of those premiums.
         d.  The type of policy offered or sold, i.e., whole life, term
      life, universal life, or a group policy certificate, any additional
      benefits contained in the policy, and the current status of the
      policy.
         e.  If the policy is term insurance, the special risks
      associated with term insurance including but not limited to the
      viatical settlement purchaser's responsibility for additional
      premiums if the viator continues the term policy at the end of the
      current term.
         f.  Whether the policy is contestable.
         g.  Whether the insurer that wrote the policy has any
      additional rights that could negatively affect or extinguish the
      viatical settlement purchaser's rights under the viatical settlement
      contract, what these rights are, and under what conditions these
      rights are activated.
         h.  The name and address of the person responsible for
      monitoring the insured's condition.  The viatical settlement provider
      shall describe how often the monitoring of the insured's condition is
      done, how the date of death is determined, and how and when this
      information will be transmitted to the viatical settlement purchaser.
      

         2008 Acts, ch 1155, §8; 2008 Acts, ch 1191, §130
         Referred to in § 508E.5, 508E.10