304.15-715 Requirements for life settlement contracts.
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(2)
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(5)
A life settlement provider entering into a life settlement contract with any person
shall first obtain:
(a) If the owner is insured, a written statement from a licensed attending
physician that the owner is of sound mind and under no constraint or undue
influence to enter into a life settlement contract; and
(b) A document in which the insured consents to the release of his or her medical
records to a life settlement provider, life insurance agent, or life settlement
broker and, if the policy was issued less than two (2) years from the date of
application for a life settlement contract, to the insurance company that issued
the policy.
The insurer shall respond to a request for verification of coverage submitted by a
life settlement provider or life settlement broker not later than thirty (30) calendar
days after the date the request is received. The request for verification of coverage
shall be made on a form approved by the commissioner. The insurer shall complete
and issue the verification of coverage or indicate in which respects it is unable to
respond. In its response, the insurer shall indicate whether, based on the medical
evidence and documents provided, the insurer intends to pursue an investigation at
that time regarding the validity of the insurance contract or possible fraud, and shall
provide sufficient detail of all reasons for the investigation to the life settlement
provider or life settlement broker.
Prior to or at the time of execution of the life settlement contract, the life settlement
provider shall obtain a witnessed document in which the owner consents to the life
settlement contract, represents that he or she has a full and complete understanding
of the life settlement contract and a full and complete understanding of the benefits
of the policy, and acknowledges that he or she has entered into the life settlement
contract freely and voluntarily and, for persons with a terminal or chronic illness or
condition, that the terminal or chronic illness or condition was diagnosed after the
policy was issued.
All medical information solicited or obtained by any licensee shall be subject to the
applicable provision of state law relating to confidentiality of medical information.
All life settlement contracts entered into in this state shall contain an unconditional
right to rescind a life settlement contract before the earlier of thirty (30) calendar
days after the date it is executed or fifteen (15) calendar days after the date of
receipt of the proceeds of the life settlement contract by the owner. If exercised by
the owner, rescission is effective only if both notice of the rescission is given, and
within the rescission period all proceeds, and any premiums, loans, and loan interest
are repaid to the life settlement provider. If the insured dies during the rescission
period, the life settlement contract shall be deemed to have been rescinded subject
to repayment of all proceeds and any premiums, loans, and loan interest to the life
settlement provider. The life settlement provider shall effectuate the change of
ownership of the policy or certificate to the owner immediately upon effective
rescission by the owner.
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(8)
(9)
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The independent third-party trustee shall transfer the proceeds that are due to the
owner within two (2) business days upon receipt of acknowledgment of the transfer
of ownership from the insurer.
Failure to tender consideration to the owner for the life settlement contract by the
date disclosed renders the life settlement contract voidable by the owner for lack of
consideration until the time consideration is tendered to and accepted by the owner.
Contacts with the insured for the purpose of determining the health status of the
insured after the execution of the life settlement contract shall only be made by the
life settlement provider or its authorized representative and shall be limited to once
every three (3) months for an insured with a life expectancy of more than one (1)
year, and to no more than once per month for an insured with a life expectancy of
one (1) year or less. The life settlement provider shall explain the procedure for
these contacts at the time the life settlement contract is entered into. The limitations
set forth in this subsection shall not apply to any contacts with an insured for
reasons other than determining the insured's health status. Life settlement providers
shall be responsible for the actions of their authorized representatives.
The insurer shall not unreasonably delay effecting change of ownership or
beneficiary with any life settlement contract lawfully entered into in the
Commonwealth or with a resident of the Commonwealth.
If a life settlement broker performs any activities required of the provider under this
section, the provider is deemed to have fulfilled those requirements of this section
that have been properly performed by the broker.
If a life settlement broker performs any of the disclosure activities required of the
provider under KRS 304.15-710, the provider is deemed to have fulfilled those
requirements of KRS 304.15-710 that have been properly performed by the broker.
Within twenty (20) days after an owner executes the life settlement contract, the
provider shall give written notice to the insurer that issued that insurance policy that
the policy has become subject to a life settlement contract. The notice shall be
accompanied by the documents required by KRS 304.15-702(1)(b).
Any fee paid by a provider, party, individual, or an owner to a broker in exchange
for services provided to the owner pertaining to a life settlement contract shall be
computed as a percentage of the offer obtained, not the face value of the policy.
Nothing in this section shall be construed as prohibiting a broker from reducing
such broker's fee below this percentage if the broker so chooses.
The broker shall disclose to the owner anything of value paid or given to a broker
which relates to a life settlement contract.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1196, effective July 15, 2010. -Amended 2008 Ky. Acts ch. 32, sec. 6, effective July 15, 2008. -- Amended 2005
Ky. Acts ch. 58, sec. 10, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 472,
sec. 4, effective July 14, 2000. -- Created 1998 Ky. Acts ch. 403, sec. 5, effective
July 15, 1998.
Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 32 intended to
change all existing references in the KRS from "viatical settlement" to "life
settlement." One reference to "viatical settlement" in this section was overlooked
during the bill drafting process. The Reviser of Statutes has made this change upon
the authority of KRS 7.136(1)(h).
Legislative Research Commission Note (6/20/2005). Under the authority of KRS
7.136(1)(h), during codification a manifest clerical or typographical error occurring
in 2005 Ky. Acts ch. 58, sec. 10(5) has been corrected. It is clear from the context
and legislative history of the Act that the words "and within the rescission period"
were misplaced within the sentence in which they occur, and the correct placement
within the sentence has been effectuated during codification.
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