2005 Illinois Code - Chapter 215 Insurance 215 ILCS 158/ Viatical Settlements Act.
(215 ILCS 158/1)
Sec. 1.
Short title.
This Act may be cited as the Viatical Settlements Act.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/5)
Sec. 5.
Definitions.
As used in this Act, the following definitions
apply:
"Director" means the Director of Insurance.
"Person" means any natural or artificial entity including, but not limited
to, individuals, partnerships, associations, trusts, or corporations.
"Viatical settlement agent" means an individual, partnership, corporation,
or
other entity who through appointment by at least one viatical settlement
provider and for a fee, commission, or other
valuable consideration, offers or advertises the availability of viatical
settlements, introduces viators to viatical settlement providers, or offers or
attempts to negotiate viatical settlements between a viator and one or more
viatical settlement providers. "Viatical settlement agent" does not include
an attorney licensed to practice law, a public accountant as defined in the
Illinois Public Accounting Act, or a person licensed under the Debt Management Service Act retained to represent the viator
whose compensation is not paid by the viatical settlement provider.
"Viatical settlement contract" means a written agreement entered into between
a viatical settlement provider and a person who owns a life insurance policy or
who owns or is covered under a group policy, insuring the life of a person who
has a catastrophic or life threatening illness or condition. The agreement
shall establish the terms under which the viatical settlement provider will pay
compensation or anything of value, which compensation or value is less than the
expected death benefit of the insurance policy or certificate, in return for
the policyowner's assignment, transfer, sale, devise, or bequest of the death
benefit or ownership of the insurance policy or certificate to the viatical
settlement provider.
"Viatical settlement provider" means an individual, partnership, corporation,
or other entity that enters into an agreement with a person who owns a life
insurance policy, or who owns or is covered under a group policy, insuring the
life of a person who has a catastrophic or life threatening illness or
condition,
under the terms of which the viatical settlement provider pays compensation or
anything of value, which compensation or value is less than the expected death
benefit of the insurance policy or certificate, in return for the policyowner's
assignment, transfer, sale, devise, or bequest of the death benefit or
ownership
of the insurance policy or certificate to the viatical settlement provider.
"Viatical settlement provider" does not include:
(1) a licensed insurance company, bank, savings |
|
bank, savings and loan association, credit union, commercial finance company or other licensed lending institution, investment company registered under the Investment Company Act of 1940, pension plan qualified under Section 401(a) of the Internal Revenue Code of 1986, or trust funding such a pension plan that takes an assignment of a life insurance policy only as collateral for a loan;
|
|
(2) sophisticated investors meeting the standards of
|
|
subsection H of Section 4 of the Illinois Securities Law of 1953 who invest in or lend to a licensed viatical settlement provider or other persons who so invest pursuant to a registered security offering; or
|
|
(3) the issuer of a life insurance policy providing
|
|
accelerated benefits under the Illinois Insurance Code.
|
|
"Viaticated policy" means a life insurance policy held by a viatical
settlement provider, directly or indirectly, through a viatical settlement
contract.
"Viator" means a person who owns a life insurance policy, or who owns or is
covered under a group policy, insuring the life of a
person with a catastrophic or life threatening illness or condition
who enters into an agreement under which the viatical
settlement provider will pay compensation or anything of value, which
compensation or value is less than the expected death benefit of the insurance
policy or certificate, in return for the viator's assignment, transfer, sale,
devise, or bequest of the death benefit or ownership of the insurance policy or
certificate to the viatical settlement provider.
(Source: P.A. 89‑484, eff. 6‑21‑96; 90‑545, eff. 1‑1‑98.)
|
(215 ILCS 158/10)
Sec. 10.
License requirements.
(a) No individual, partnership, corporation, or other entity may act as a
viatical settlement provider
without first having obtained a license from the Director.
(b) Application for a viatical settlement provider license shall be made to
the Director by the applicant on a form prescribed by the Director. The
application shall be accompanied by a fee of $3,000, which shall
be deposited
into the Insurance Producer Administration Fund.
(c) Viatical settlement providers' licenses may be renewed from year to year
on the anniversary date upon
(1) submission of renewal forms prescribed by the Director and (2) payment of
the annual renewal fee of $1,500, which shall be deposited into
the Insurance
Producer Administration Fund.
Failure to pay
the fee within
the terms prescribed by the Director shall result in the expiration of the
license.
(d) Applicants for a viatical settlement provider's license shall provide
such information as the Director may require.
The Director shall have authority, at any
time, to require the applicant to fully disclose the identity of all
stockholders, partners, officers, and employees. The Director may, in the
exercise of discretion, refuse to issue a license in the name of any firm,
partnership, or corporation if not satisfied that an officer, employee,
stockholder, or partner
thereof who may materially influence the applicant's conduct meets the
standards of this Act.
(e) A viatical settlement provider's license issued to a partnership,
corporation, or other entity
authorizes all members, officers, and designated employees to act as viatical
settlement providers under the license. All those persons must be named in
the application and any supplements thereto.
(f) Upon the filing of an application for a viatical settlement provider's
license and the payment of the license fee,
the Director shall make an investigation of the applicant and may issue a
license if the Director finds that the applicant:
(1) has provided a detailed plan of operation;
(2) is competent and trustworthy and intends to act |
|
in good faith in the capacity authorized by the license applied for;
|
|
(3) has a good business reputation and has had
|
|
experience, training, or education so as to be qualified in the business for which the license is applied for; and
|
|
(4) if a corporation, is a corporation incorporated
|
|
under the laws of this State or a foreign corporation authorized to transact business in this State.
|
|
(g) The Director may not issue a license to a nonresident applicant,
unless a written designation of an agent for service of process is filed and
maintained with the Director or the applicant has filed with the Director the
applicant's written irrevocable consent that any action against the applicant
may be commenced against the applicant by service of process on the Director.
(h) A viatical settlement provider must assume responsibility for all
actions
of its appointed viatical settlement agents associated with a viatical
settlement.
(Source: P.A. 93‑32, eff. 7‑1‑03.)
|
(215 ILCS 158/15)
Sec. 15.
License revocation.
(a) The Director has the right to suspend, revoke, or refuse to renew
the license of any viatical settlement provider if the Director finds that:
(1) there was any misrepresentation in the |
|
application for the license;
|
|
(2) the holder of the license has been guilty of
|
|
fraudulent or dishonest practices, is subject to a final administrative action, or is otherwise shown to be untrustworthy or incompetent to act as a viatical settlement provider;
|
|
(3) the licensee demonstrates a pattern of
|
|
unreasonable or untimely payments to policyowners or their designees;
|
|
(4) the licensee has been convicted of a felony or
|
|
any misdemeanor of which criminal fraud is an element; or
|
|
(5) the licensee has violated any of the provision
|
|
|
(b) Before the Director denies a license application or suspends, revokes,
or refuses to renew the license of a viatical settlement provider, the Director
shall conduct a hearing in accordance with the Illinois Administrative
Procedure Act.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/20)
Sec. 20.
Approval of viatical settlements contracts.
No viatical settlement provider may use a viatical settlement contract in
this State unless it has been filed with and approved by the Director. A
viatical settlement contract form filed with the Director shall be deemed
approved if it has not been disapproved within 60 days of the filing. The
Director shall disapprove a viatical settlement contract form if, in the
Director's opinion, the contract or provisions contained therein are
unreasonable, contrary, to the interests of the public, or otherwise misleading
or unfair to the policyowner.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/25)
Sec. 25.
Reporting requirements.
(a) A licensee shall file with the Director on or before March 1 of each
year an
annual statement containing such information as the Director may
prescribe by rule.
(b) A viatical settlement provider shall inform the Director in writing of a
change in its business address within 30 days of such change.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/30)
Sec. 30.
Examinations of applicants and licensees.
(a) The Director may, when the Director deems it reasonably necessary to
protect the interests of the public, examine the business and affairs of any
licensee or applicant for a license. The Director has the authority to
order a licensee or applicant to produce any records, books, files, or other
information reasonably necessary to ascertain whether or not the licensee or
applicant is acting or has acted in violation of the law or otherwise contrary
to the interests of the public. The expenses incurred in conducting an
examination shall be paid by the licensee or applicant.
(b) Names and individual identification data for all viators shall be
considered private and confidential information and shall not be disclosed by
the Director, unless required by law.
(c) Records of all transactions of viatical settlement contracts shall be
maintained by the licensee and shall be available to the Director for
inspection during reasonable business hours.
(d) All licensees shall maintain a record of complaints received against the
licensee and those viatical settlement agents representing the licensee. The
Director may promulgate a rule to prescribe the minimum records that must be
maintained by licensees.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/35)
Sec. 35.
Disclosure.
(a) Prior to the time a viatical settlement application is taken or the time
an offer is made by a viatical settlement provider to a person considering a
viatical settlement, whichever is later, the following information shall be
provided by the viatical settlement provider or its agent:
(1) the affiliation, if any, between the viatical |
|
settlement provider and the issuer of an insurance policy to be viaticated;
|
|
(2) 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 that insured under the policy to be viaticated, the viator must be informed of the possible loss of coverage on such other lives and advised to consult with his or her insurance producer or the company issuing the policy for advice on the proposed viatication.
|
|
(b) A viatical settlement provider shall disclose all
of the
following information to the viator no later than the date the viatical
settlement contract is signed by all parties:
(1) Possible alternatives to viatical settlement
|
|
contracts for persons with catastrophic or life threatening illnesses including, but not limited to, accelerated benefits offered by the issuer of the life insurance policy.
|
|
(2) The fact that some or all of the proceeds of the
|
|
viatical settlement may be taxable and that assistance should be sought from a personal tax advisor.
|
|
(3) The fact that the viatical settlement could be
|
|
subject to the claims of creditors.
|
|
(4) The fact that receipt of a viatical settlement
|
|
may adversely effect the recipients' eligibility for Medicaid or other government benefits or entitlements and that advice should be obtained from the appropriate agencies.
|
|
(5) The policyowner's right to rescind a viatical
|
|
settlement contract within 30 days of the date it is executed by all parties or within 15 days of the receipt of the viatical settlement proceeds by the viator, whichever is less, as provided in subsection (c) of Section 45.
|
|
(6) The date by which the funds will be available to
|
|
the viator and the source of the funds.
|
|
(7) A description of any policy benefits other than
|
|
death benefits and non‑forfeiture values in the policy to be viaticated that may be of value, such as additional purchase benefits, waiver of premium benefits, accidental death benefits, or conversion features. The viatical settlement provider shall also disclose its interest in such benefits and any options available to the viator for additional compensation or contractual reservation to the viator of policy options or other rights.
|
|
(c) A viatical settlement agent shall disclose all of the following
information to the viator no later than the date the viatical settlement
contract is signed by all parties:
(1) The identity of the viatical settlement agent.
(2) The identity of the viatical settlement provider.
(3) The nature of the relationship between the
|
|
viatical settlement agent and viatical settlement provider.
|
|
(d) The Director may promulgate a rule to assure adequate disclosure is
given to all potential viators.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/40)
Sec. 40.
Assignment or resale of viaticated policies.
A viatical
settlement provider may not sell, assign, transfer, or pledge a viaticated
policy except to another licensed viatical settlement provider or a person not
required
to be licensed under Section 10.
An insurance company licensed in
this State shall not accept the assignment of a life insurance policy from a
viatical settlement provider not licensed in this State and shall immediately
notify the Director of any such attempted transaction.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/45)
Sec. 45.
General rules.
(a) A viatical settlement provider entering into a viatical settlement
contract with a person with a catastrophic or life threatening illness or
condition shall first obtain:
(1) a written statement from a licensed attending |
|
physician that the person is of sound mind and under no constraint or undue influence; and
|
|
(2) a witnessed document in which the person
|
|
consents to the viatical settlement contract, acknowledges the catastrophic or life threatening illness, represents that he or she has a full and complete understanding of the viatical settlement contract, that he or she has a full and complete understanding of the benefits of the life insurance policy, releases his or her medical records, and acknowledges that he or she has entered into the viatical settlement contract freely and voluntarily.
|
|
(b) All medical information solicited or obtained by a licensee shall be
subject to the applicable provision of State law relating to confidentiality of
medical information.
(c) All viatical settlement contracts entered into in this State shall
provide the viator with an unconditional right to rescind the contract for at
least 30 days from the date
the contract is executed or 15 days from
the receipt of the
viatical settlement proceeds,
whichever is less.
If the insured dies during such rescission periods, the contract shall be
deemed to have been rescinded subject, however, to repayment to the viatical
settlement provider of any viatical settlement payments.
(d) Immediately upon receipt from the viator of documents to effect the
transfer of the insurance policy, the viatical settlement provider shall pay
the entire proceeds of the settlement into an escrow or trust account managed
by
an escrow agent or trustee
in a state or federally chartered financial institution that is a member of
the Federal Reserve System pending
acknowledgment of the transfer by the issuer of the policy. The trustee or
escrow agent shall be required to transfer the proceeds due to the viator
immediately upon receipt of acknowledgment of the transfer from the insurer.
(e) Failure to tender the viatical settlement by the date disclosed to the
viator renders the contract a nullity.
(f) A viatical settlement agent may not receive a fee, commission, or other
valuable consideration for his or her services involving unlicensed viatical
settlement providers with respect to (1) viatical settlements or (2) the
assignment or resale of viaticated policies.
(g) A viatical settlement provider may not pay a person not appointed as an
agent by that provider any fee, commission, or other valuable consideration for
his or
her services with respect to (1) viatical settlements or (2) the assignment or
resale of viaticated policies.
(h) A viatical settlement provider or viatical settlement agent shall not
pay or offer to pay any referral or finder's fee, commission, or other
compensation to viator's physician, attorney, or accountant.
(i) A viatical settlement agent may not receive any compensation from a
prospective viator or a viator.
(j) If the viator rescinds the viatical settlement contract, the viatical
settlement provider shall notify the issuer of the insurance policy of the
recision. The notification shall be made by the viatical settlement provider
to the issuer of the insurance policy within 20 days from the date the viatical
settlement provider receives the recision request from the viator.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/50)
Sec. 50.
Authority to promulgate standards.
The Director shall have the authority to do all the following:
(1) Issue rules implementing this Act.
(2) Establish standards for evaluating reasonableness of payments under
viatical settlement contracts. This authority includes, but is not limited to,
regulation of discount rates used to determine the amount paid in exchange for
assignment, transfer, sale, devise, or bequest of a benefit under a life
insurance policy.
(3) Establish licensing requirements and fees for viatical settlement
providers and
viatical settlement agents.
(4) Establish standards for solicitation and disclosure including, but not
limited to, regulation of disclosure requirements and advertising.
(5) Establish standards for examination of viatical settlement providers and
viatical settlement agents.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/55)
Sec. 55.
Application.
No viatical settlement provider transacting
business in this State may continue to do so after the effective date of this
Act unless it is in compliance with this Act.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
(215 ILCS 158/95)
Sec. 95.
(Amendatory provisions; text omitted).
(Source: P.A. 89‑484, eff. 6‑21‑96; text omitted.)
|
(215 ILCS 158/97)
Sec. 97.
(Amendatory provisions; text omitted).
(Source: P.A. 89‑484, eff. 6‑21‑96; text omitted.)
|
(215 ILCS 158/99)
Sec. 99.
Effective date.
This Act takes effect upon becoming law.
(Source: P.A. 89‑484, eff. 6‑21‑96.)
|
Disclaimer: These codes may not be the most recent version. Illinois may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
