2005 Nevada Revised Statutes - Chapter 688C — Viatical Settlements

CHAPTER 688C - VIATICAL SETTLEMENTS

GENERAL PROVISIONS

NRS 688C.010 Definitions.

NRS 688C.020 Advertisingdefined.

NRS 688C.030 Brokerof viatical settlements defined.

NRS 688C.040 Businessof viatical settlements defined.

NRS 688C.050 Chronicallyill defined.

NRS 688C.060 Financingagent defined.

NRS 688C.070 Policydefined.

NRS 688C.080 Providerof viatical settlements defined.

NRS 688C.090 Purchaserof viatical settlements defined.

NRS 688C.100 Specialorganization defined.

NRS 688C.110 Terminallyill defined.

NRS 688C.120 Trustfor a related provider defined.

NRS 688C.130 Viaticalsettlement defined.

NRS 688C.140 Viaticatedpolicy defined.

NRS 688C.150 Viatordefined.

NRS 688C.160 Governinglaw when residents of different states are viators with respect to singlepolicy.

LICENSING; REGULATION

NRS 688C.170 Regulationsof Commissioner.

NRS 688C.180 Examinationsand investigations by Commissioner.

NRS 688C.190 Licenseto operate as provider or broker: General requirements; application, renewaland expiration; effect.

NRS 688C.200 Investigationof applicant and issuance of license; provision of new or revised informationto Commissioner.

NRS 688C.210 Suspension,revocation or refusal of license.

NRS 688C.215 Licenseto operate as broker not required for certain producers of insurance.

NRS 688C.220 Filingand approval of forms; submission of advertising material.

NRS 688C.230 Filingof annual statement; disclosure of identity of insured.

NRS 688C.240 Retentionof records and documents.

NRS 688C.250 Disclosuresto viator upon or before execution of application for settlement.

NRS 688C.260 Disclosuresto viator upon or before execution of settlement.

NRS 688C.270 Prerequisitesto entry by viator into settlement within 2 years after issuance of policy;submission of independent evidence or certification to insurer.

NRS 688C.280 Acquisitionof certain documents by provider before entry into settlement; notice to issuerof policy.

NRS 688C.290 Submissionby viator of certain documents to escrow agent; duties of escrow agent; paymentof viator.

NRS 688C.300 Terminationof settlement within 15 days after receipt of proceeds.

NRS 688C.310 Contactwith insured to determine status of his health after settlement.

NRS 688C.320 Confidentialityof medical information.

NRS 688C.330 Noticeof transfer of ownership or change of beneficiary of viaticated policy.

NRS 688C.340 Trustfor related provider: Required agreement between trustee and provider.

ADVERTISING

NRS 688C.350 Applicabilityand interpretation of provisions.

NRS 688C.360 Establishmentand maintenance by licensee of system of control; responsibility foradvertisements.

NRS 688C.370 Avoidanceof deception.

NRS 688C.380 Textof information required to be disclosed; use of misleading omissions, languageor illustrations; use of name or title of insurer or policy; prohibitedstatements, implications and words.

NRS 688C.390 Useof testimonial, appraisal, analysis, endorsement or statistical information.

NRS 688C.400 Prohibiteddisparagement.

NRS 688C.410 Identificationof provider and settlement; statement of name of licensee.

NRS 688C.420 Useof words, symbols or physical materials similar to those of governmentalprogram or agency; creation of impression of governmental recommendation orendorsement; statements regarding licensing.

NRS 688C.430 Disclosuresrequired when emphasizing speed of viatication or monetary amounts available.

UNLAWFUL ACTS; FRAUD; ENFORCEMENT

NRS 688C.440 Unlawfulacts.

NRS 688C.450 Feloniousacts.

NRS 688C.460 Provisionto Commissioner of information regarding felonious acts.

NRS 688C.470 Immunityof persons providing information regarding felonious acts.

NRS 688C.480 Confidentialityand disclosure of certain documents and information regarding felonious acts.

NRS 688C.490 Establishment,maintenance and modification by licensees of certain protective measuresagainst fraud; confidentiality of plan submitted to Commissioner.

NRS 688C.500 Statementrequired on application or contract for settlement.

NRS 688C.510 Injunctiveand other relief; administrative fine; restitution; civil action.

_________

GENERAL PROVISIONS

NRS 688C.010 Definitions. As used in this chapter, unless the context otherwiserequires, the words and terms defined in NRS688C.020 to 688C.150, inclusive,have the meanings ascribed to them in those sections.

(Added to NRS by 2001, 2166)

NRS 688C.020 Advertisingdefined. Advertising means a written, electronicor printed communication or a communication by recorded telephone message,radio, television, the Internet or a similar medium of communication, includinga film strip, motion picture or videotape, published, communicated or otherwiseplaced before the public to create an interest in, or induce a person to sell apolicy of life insurance pursuant to, a viatical settlement.

(Added to NRS by 2001, 2167)

NRS 688C.030 Brokerof viatical settlements defined. Broker ofviatical settlements means a person who on behalf of a viator and for a fee,commission or other valuable consideration offers or attempts to negotiate aviatical settlement between the viator and one or more providers of viaticalsettlements. The term does not include an attorney at law, certified publicaccountant or financial planner accredited by a nationally recognizedaccrediting agency who is retained by the viator and whose compensation is notpaid by a provider or purchaser of viatical settlements.

(Added to NRS by 2001, 2167)

NRS 688C.040 Businessof viatical settlements defined. Business ofviatical settlements means the offering, solicitation, negotiation,procurement, effectuation, purchasing, financing, monitoring, tracking,underwriting, selling, transferring, pledging or otherwise hypothecating ofviatical settlements.

(Added to NRS by 2001, 2167)

NRS 688C.050 Chronicallyill defined. Chronically ill means:

1. Being unable to perform at least two activities ofdaily living, such as eating, moving from one place to another, bathing,dressing, continence, defecation or urination;

2. Requiring substantial supervision for protectionfrom threats to health and safety because of cognitive impairment; or

3. Having a level of disability similar to thatdescribed in subsection 1 as determined by the Secretary of Health and HumanServices.

(Added to NRS by 2001, 2167)

NRS 688C.060 Financingagent defined.

1. Financing agent means an underwriter, agent forplacement, enhancer of credit, lender, purchaser of securities, purchaser of apolicy from a provider of viatical settlements or other person that may enterinto a viatical settlement and has direct ownership in a policy that is thesubject of the viatical settlement but:

(a) Whose principal activity related to the transactionis providing money to effect the viatical settlement; and

(b) Who has an agreement in writing with one or morelicensed providers of viatical settlements to finance the acquisition of one ormore viatical settlements.

2. The term does not include a nonaccredited investoror a purchaser of viatical settlements.

(Added to NRS by 2001, 2167)

NRS 688C.070 Policydefined. Policy means an individual or grouppolicy, group certificate, contract or arrangement of life insurance affectingthe rights of a person, whether or not delivered or issued for delivery in thisstate.

(Added to NRS by 2001, 2167)

NRS 688C.080 Providerof viatical settlements defined. Provider ofviatical settlements means a person other than a viator who enters into oreffectuates a viatical settlement. The term does not include:

1. A bank, savings and loan association, thriftcompany, credit union or other licensed lender that takes an assignment of apolicy as security for a loan;

2. The issuer of a policy that provides acceleratedbenefits pursuant to the contract;

3. An authorized or eligible insurer that providesstop-loss coverage to a provider or purchaser of viatical settlements;

4. A natural person who enters into no more than oneagreement in a calendar year for the transfer of policies for a value less thanthe expected death benefit;

5. A financing agent;

6. A special organization;

7. A trust for a related provider; or

8. A purchaser of viatical settlements.

(Added to NRS by 2001, 2167)

NRS 688C.090 Purchaserof viatical settlements defined. Purchaserof viatical settlements means a person who gives a sum of money asconsideration for a policy or an interest in the death benefits of a policy, ora person who owns or acquires or is entitled to a beneficial interest in atrust that owns a viatical settlement contract or is the beneficiary of apolicy that has been or will be the subject of a viatical settlement contract,for the purpose of deriving an economic benefit. The term does not include:

1. A person licensed pursuant to this chapter;

2. An accredited investor or qualified institutionalbuyer as defined respectively in Regulation D, Rule 501 or Rule 144A of theFederal Securities Act of 1933, as amended;

3. A financing agent;

4. A special organization; or

5. A trust for a related provider.

(Added to NRS by 2001, 2168)

NRS 688C.100 Specialorganization defined. Special organizationmeans an organization formed by a licensed provider of viatical settlementssolely to enable the provider to gain access to institutional markets forcapital.

(Added to NRS by 2001, 2168)

NRS 688C.110 Terminallyill defined. Terminally ill means having anillness that can reasonably be expected to result in death within 24 months.

(Added to NRS by 2001, 2168)

NRS 688C.120 Trustfor a related provider defined. Trust for arelated provider means a trust established by a licensed provider of viaticalsettlements solely to hold the ownership of or beneficial interests inpurchased policies in connection with financing.

(Added to NRS by 2001, 2168)

NRS 688C.130 Viaticalsettlement defined. Viatical settlementmeans a written agreement for the payment of money, or anything else of value,which is less than the expected death benefit of a policy, in exchange for theviators assignment, sale, transfer or devise of the death benefit or ownershipof any portion of the policy. The term includes:

1. An agreement for a loan or other financing securedprimarily by a policy, other than a loan by an insurer pursuant to or securedby the cash value of a policy; and

2. An agreement to transfer ownership or change thebeneficiary, in the future, regardless of the date of payment to the viator.

(Added to NRS by 2001, 2168)

NRS 688C.140 Viaticatedpolicy defined. Viaticated policy means apolicy that has been acquired by a provider of viatical settlements pursuant toa viatical settlement.

(Added to NRS by 2001, 2168)

NRS 688C.150 Viatordefined. Viator means the owner of a policyor the holder of a certificate of insurance under a policy of group insurance.The term is not limited to an owner who is terminally or chronically ill exceptwhere that limitation is expressly provided.

(Added to NRS by 2001, 2168)

NRS 688C.160 Governinglaw when residents of different states are viators with respect to singlepolicy. If there is more than one viator withrespect to a single policy and they are residents of different states, thelegal effect of a viatical settlement is governed by the law of the state inwhich the viator having the largest fractional ownership resides. If theviators own equal fractions, they may agree in writing to choose the state inwhich one resides.

(Added to NRS by 2001, 2169)

LICENSING; REGULATION

NRS 688C.170 Regulationsof Commissioner. The Commissioner may adoptregulations to:

1. Establish standards for evaluating thereasonableness of payments under viatical settlements to persons chronically orterminally ill, including the regulation of the rates of discount used todetermine the amount paid in exchange for an assignment, transfer, sale ordevise of a benefit under a policy.

2. Require a bond or otherwise ensure financialaccountability of providers and brokers of viatical settlements.

3. Govern the relationship of insurers with providersand brokers of viatical settlements during the viatication of a policy.

4. Establish standards and requirements for licensingand registering producers of insurance acting as brokers of viatical settlements.

(Added to NRS by 2001, 2179; A 2005, 2135)

NRS 688C.180 Examinationsand investigations by Commissioner. TheCommissioner may examine or investigate a licensee under this chapter as oftenas he considers appropriate. An examination will be conducted in the mannerprovided in NRS 679B.230 to 679B.300, inclusive. The Commissioner mayalso examine or investigate any other person or business insofar as heconsiders necessary or material to the examination or investigation of thelicensee. Instead of an examination or investigation under this chapter of aforeign or alien person licensed under this chapter, the Commissioner mayaccept a report on examination or investigation of the licensee by the equivalentauthority of the licensees state of domicile or port of entry.

(Added to NRS by 2001, 2170)

NRS 688C.190 Licenseto operate as provider or broker: General requirements; application, renewaland expiration; effect.

1. Except as otherwise provided in NRS 688C.215, a person shall not, withoutfirst obtaining a license from the Commissioner, operate in or from this Stateas a provider or broker of viatical settlements.

2. Application for a license must be made to theCommissioner on a form prescribed by him, accompanied by the prescribed fee. Alicense may be renewed from year to year on its anniversary by payment of theprescribed fee. The license expires if the fee is not paid by that date.

3. An applicant shall provide information on formsrequired by the Commissioner, who may at any time require the applicant todisclose the identity of all stockholders, partners, members, officers andemployees. The Commissioner may refuse to issue a license to an organization ifhe is not satisfied that a stockholder, partner, member or officer who maymaterially influence the applicants conduct satisfies the requirements of thischapter.

4. A license issued to an organization authorizes allpartners, members, officers and designated employees to act as providers orbrokers of viatical settlements. Those persons must be named in the applicationor a supplement to it.

(Added to NRS by 2001, 2169; A 2005, 2135)

NRS 688C.200 Investigationof applicant and issuance of license; provision of new or revised informationto Commissioner.

1. Upon the filing of an application and payment ofthe fee, the Commissioner shall investigate the applicant, and issue a licenseif he finds that the applicant:

(a) If a provider of viatical settlements, has setforth a detailed plan of operation;

(b) Is competent and trustworthy and intends to act ingood faith in the capacity for which the license is sought;

(c) Has a good reputation in business and, if a naturalperson, has had experience, training or education which qualifies him in thatcapacity;

(d) If an organization, provides a certificate of goodstanding from the state of its domicile; and

(e) If a provider or broker of viatical settlements,has included a plan to prevent fraud which satisfies the requirements of NRS 688C.490.

2. The Commissioner shall not issue a license to anonresident unless a written designation of an agent for service of process, oran irrevocable written consent to the commencement of an action against theapplicant by service of process upon the Commissioner, accompanies theapplication.

3. A provider or broker of viatical settlements shallfurnish to the Commissioner new or revised information concerning partners,members, officers, holders of more than 10 percent of its stock, and designatedemployees within 30 days after a change occurs.

(Added to NRS by 2001, 2169)

NRS 688C.210 Suspension,revocation or refusal of license. Afternotice, and after a hearing if requested, the Commissioner may suspend, revoke,refuse to issue or refuse to renew a license under this chapter if he findsthat:

1. There was material misrepresentation in theapplication for the license;

2. The licensee or an officer, partner, member orsignificant managerial employee has been convicted of fraudulent or dishonestpractices, is subject to a final administrative action for disqualification, oris otherwise shown to be untrustworthy or incompetent;

3. A provider of viatical settlements has engaged in apattern of unreasonable payments to viators;

4. The applicant or licensee has been found guilty of,or pleaded guilty or nolo contendere to, a felony or a misdemeanor involvingfraud, forgery, embezzlement, obtaining money under false pretenses, larceny,extortion, conspiracy to defraud or any crime involving moral turpitude,whether or not a judgment of conviction has been entered by the court;

5. A provider of viatical settlements has entered intoa viatical settlement in a form not approved pursuant to NRS 688C.220;

6. A provider of viatical settlements has failed tohonor obligations of a viatical settlement;

7. The licensee no longer meets a requirement forinitial licensure;

8. A provider of viatical settlements has assigned,transferred or pledged a viaticated policy to a person other than anotherprovider licensed under this chapter, a purchaser of the viatical settlement, aspecial organization or a trust for a related provider;

9. The applicant or licensee has provided materiallyuntrue information to an insurer that issued a policy that is the subject of aviatical settlement;

10. The applicant or licensee has failed to pay a taxas required pursuant to the provisions of chapter363A of NRS; or

11. The applicant or licensee has violated a provisionof this chapter.

(Added to NRS by 2001, 2169; A 2005, 1785)

NRS 688C.215 Licenseto operate as broker not required for certain producers of insurance.

1. A natural person who has been licensed for at least1 year and who is in good standing as a resident or nonresident producer ofinsurance with a life insurance qualification is not required to be licensed asa broker of viatical settlements.

2. A licensed producer of insurance specified insubsection 1 must register with the Division not more than 30 days after firstoperating as a broker of viatical settlements, on a form prescribed by the Commissioner,and pay the fee for registration pursuant to NRS 680B.010. Failure to register withinthe required period or late payment of or failure to pay the fee may result inthe imposition of an administrative fine of not more than $500.

3. A producer of insurance who acts as a broker ofviatical settlements pursuant to subsection 1 shall comply with the provisionsof NRS 688C.220 to 688C.250, inclusive, and 688C.310.

(Added to NRS by 2005, 2135)

NRS 688C.220 Filingand approval of forms; submission of advertising material. A person shall not use a form of viatical settlement or ofdisclosure in this state unless the form has been filed with and approved bythe Commissioner. The Commissioner shall disapprove such a form if, in hisopinion, the settlement or any of its terms is unreasonable, contrary to theinterests of the public or otherwise misleading or unfair to the viator. TheCommissioner may require the submission of advertising material before its use.

(Added to NRS by 2001, 2170)

NRS 688C.230 Filingof annual statement; disclosure of identity of insured.

1. Each licensee under this chapter shall file withthe Commissioner on or before March 1 of each year an annual statementcontaining such information as the Commissioner prescribes by regulation.

2. Except as allowed or required by a statute otherthan this chapter, a provider or broker of viatical settlements, an insurer, aproducer of insurance, an information bureau, a rating agency or any otherperson knowing the identity of an insured shall not disclose that identity asan insured to any other person unless the disclosure is:

(a) Necessary to effect a viatical settlement betweenthe viator and a provider of viatical settlements and the viator and theinsured have given prior written consent to the disclosure;

(b) Furnished in response to an investigation orexamination by the Commissioner or another governmental officer or agency;

(c) A term of or condition to the transfer of a policyby one provider of viatical settlements to another provider; or

(d) Necessary to permit a financing agent to financethe purchase of a policy by a provider of viatical settlements and the insuredhas given prior written consent to the disclosure.

(Added to NRS by 2001, 2170)

NRS 688C.240 Retentionof records and documents.

1. A person required to be licensed under this chaptershall retain for 5 years copies of all:

(a) Contracts, underwriting documents, forms of policyand applications, from the date of the proposal, offer or execution, whicheveris latest;

(b) Checks, drafts and other evidence or documentationrelating to the payment, transfer or release of money, from the date of thetransaction; and

(c) Records and documents related to the requirementsof this chapter.

2. This section does not relieve a person of theobligation to produce a document described in subsection 1 to the Commissionerafter the expiration of the relevant period if the person has retained thedocument.

3. Records required by this section to be retainedmust be legible and complete. They may be retained in any form or by anyprocess that accurately reproduces or is a durable medium for the reproductionof the record.

(Added to NRS by 2001, 2171)

NRS 688C.250 Disclosuresto viator upon or before execution of application for settlement.

1. With each application for a viatical settlement, a provideror broker of viatical settlements shall furnish to the viator at least thefollowing disclosures no later than the time the application for the settlementis signed by all the parties, in a separate document signed by the viator andthe provider or broker:

(a) The possible alternatives to viatical settlement,including any accelerated death benefits or loans offered under the viatorspolicy.

(b) Some or all of the proceeds of the viaticalsettlement may be taxable under the federal income tax or a state franchise orincome tax, and assistance should be sought from a professional tax adviser.

(c) Proceeds of the viatical settlement may be subjectto the claims of creditors.

(d) Receipt of proceeds of a viatical settlement mayadversely affect the viators eligibility for Medicaid or other governmentalbenefits, and advice should be sought from the appropriate governmentalagencies.

(e) The viator has a right to terminate a viaticalsettlement within 15 days after his receipt of the proceeds, as provided in NRS 688C.300, and if the insured diesduring that period, the settlement is terminated and all proceeds must berepaid to the provider.

(f) Money will be sent to the viator within 3 businessdays after the provider has received the insurers or group administratorsacknowledgment that ownership of or interest in the policy has been transferredand the beneficiary has been designated.

(g) Entering into a viatical settlement may cause otherrights, including conversion and waiver of premium, that may exist under thepolicy to be forfeited by the viator, and assistance should be sought from afinancial adviser.

(h) A brochure is provided which describes the processof viatical settlement, in the form prescribed by the National Association ofInsurance Commissioners unless the Commissioner prescribes a different form.

2. The document in which the disclosures required byparagraphs (a) to (g), inclusive, of subsection 1 are made must also containthe following:

 

All medical, financial and personalinformation solicited or obtained by a provider or broker of viaticalsettlements about an insured, including his identity and that of members of hisfamily, a spouse or other relationship, may be disclosed as necessary to effectthe viatical settlement between the viator and the provider. If you are askedto provide this information, you will be asked to consent to the disclosure.Failure to consent may affect your ability to viaticate your policy. Theinformation may be furnished to someone who buys the policy or provides moneyfor the purchase.

 

(Added to NRS by 2001, 2171)

NRS 688C.260 Disclosuresto viator upon or before execution of settlement. Aprovider of viatical settlements shall furnish to the viator, no later than thedate the viatical settlement is signed by all parties, at least the followingdisclosures, conspicuously displayed in the viatical settlement or in aseparate document signed by the viator and the provider or broker of viaticalsettlements:

1. The affiliation, if any, between the provider andthe issuer of the policy to be viaticated.

2. The name, address and telephone number of theprovider.

3. The amount and method of calculating the brokerscommission, including anything of value paid or given to the broker for placingthe policy.

4. If the policy to be viaticated was issued as ajoint policy, contains family riders or covers a life other than that of theinsured under it, any possible loss of coverage on the other lives under thepolicy, and that the viator should consult the producer of the insurance or theissuer of the policy for advice concerning the settlement.

5. The monetary amount of the current death benefitpayable to the provider under the policy and, if known, the availability of anyother guaranteed benefit, the monetary amount of any benefit for accidentaldeath or dismemberment, and the providers interest in those benefits.

6. The name, business address and telephone number ofthe escrow agent, and the right of the viator or owner to inspect or receivecopies of the relevant escrow or trust agreements or related documents.

(Added to NRS by 2001, 2172)

NRS 688C.270 Prerequisitesto entry by viator into settlement within 2 years after issuance of policy;submission of independent evidence or certification to insurer.

1. A viator may not enter into a viatical settlementwithin 2 years after the issuance of the policy to which the settlement relatesunless one or more of the following conditions is or has been satisfied:

(a) The policy was issued upon the owners exercise ofa right of conversion arising out of a group policy.

(b) The owner of the policy is a charitableorganization exempt from taxation under 26 U.S.C. 501(c)(3).

(c) The owner of the policy is a business organization.

(d) The viator or owner submits to the provider ofviatical settlements independent evidence that within the 2-year period:

(1) The owner or insured has been diagnosed tohave an illness or condition that is life-threatening or requires a course oftreatment for at least 2 years, long-term care or health care at home, or anycombination of these;

(2) The spouse of the owner or insured has died;

(3) The owner or insured has divorced hisspouse;

(4) The owner or insured has retired fromfull-time employment;

(5) The owner or insured has become physically ormentally disabled and a physician determines that the disability precludes himfrom maintaining full-time employment;

(6) The owner of the policy was the employer ofthe insured and that relationship has terminated;

(7) A final judgment or order has been enteredor issued by a court of competent jurisdiction, on the application of acreditor or owner of the insured, adjudging the owner or insured bankrupt orinsolvent, or approving a petition for reorganization of the owner or insuredor appointing a receiver, trustee or liquidator for all or a substantial partof the assets of the owner or insured;

(8) The owner of the policy experiences asignificant decrease in income which is unexpected by him and impairs hisreasonable ability to pay the premium on the policy; or

(9) The owner or insured disposes of hisownership in a closely held corporation.

2. The independent evidence must be submitted to theinsurer when the provider of viatical settlements submits a request to theinsurer to effect transfer of the policy to him. The insurer shall respondtimely to the request. This section does not prohibit an insurer fromexercising its right to contest a policy on the ground of fraud.

3. If a provider of viatical settlements submits to aninsurer a copy of the owners or insureds certification that one of the eventsdescribed in paragraph (d) of subsection 1 has occurred, the certificationconclusively establishes that the viatical settlement is valid, and the insurershall timely respond to the providers request to effect a transfer of thepolicy.

(Added to NRS by 2001, 2173)

NRS 688C.280 Acquisitionof certain documents by provider before entry into settlement; notice to issuerof policy.

1. A provider of viatical settlements who enters intoa settlement shall first obtain:

(a) If the viator is the insured, a written statementfrom a licensed attending physician that the viator is of sound mind and underno constraint or undue influence to enter into a settlement;

(b) A witnessed document in which the viator representsthat he has a full and complete understanding of the settlement and of thebenefits of the policy, acknowledges that he has entered into the settlementfreely and voluntarily and, if applicable to determine a payment to a personterminally or chronically ill, acknowledges that he is terminally orchronically ill and that the illness was diagnosed after the policy was issued;and

(c) A document in which the insured consents to therelease of his medical records to a provider or broker of viatical settlementsand the insurer that issued the policy covering him.

2. Within 20 days after a viator executes documentsnecessary to transfer rights under a policy, or enters into an agreement in anyform, express or implied, to viaticate the policy, the provider of viaticalsettlements shall give written notice to the issuer of the policy that thepolicy has or will become viaticated. The notice must be accompanied by a copyof the release of medical records and the application for the viaticalsettlement.

(Added to NRS by 2001, 2172)

NRS 688C.290 Submissionby viator of certain documents to escrow agent; duties of escrow agent; paymentof viator.

1. A provider of viatical settlements shall instructthe viator to send the executed documents required to effect the change inownership or assignment or change of beneficiary of the affected policy to adesignated independent escrow agent. Within 3 business days after the date theescrow agent receives the documents, or within 3 business days after theprovider receives the documents if by mistake they are sent directly to him,the escrow agent shall deposit the proceeds of the settlement into an escrow ortrust account maintained in a regulated financial institution whose depositsare insured by the Federal Deposit Insurance Corporation.

2. Upon deposit of the proceeds in that account, theescrow agent shall deliver to the provider the original documents executed bythe viator. Upon the providers receipt from the insurer of an acknowledgmentof the change in ownership or assignment or change of beneficiary of theaffected policy, he shall instruct the escrow agent to pay the proceeds of thesettlement to the viator.

3. Payment to the viator must be made within 3business days after the date the provider received the acknowledgment from theinsurer. Failure to make the payment within that time makes the viaticalsettlement voidable by the viator for lack of consideration until payment istendered to and accepted by the viator.

(Added to NRS by 2001, 2173)

NRS 688C.300 Terminationof settlement within 15 days after receipt of proceeds. A viatical settlement entered into in this state mustreserve to the viator an unconditional right to terminate the settlement within15 days after he receives the proceeds of the settlement. If the insured diesduring that period, the settlement is terminated, but the proceeds must berepaid to the provider of the viatical settlement.

(Added to NRS by 2001, 2173)

NRS 688C.310 Contactwith insured to determine status of his health after settlement.

1. Contact with an insured to determine the status ofhis health after a viatical settlement may be made only by a provider or brokerof viatical settlements who is licensed in this state, or its authorizedrepresentative, and no oftener than once every 3 months if the insured has alife expectancy of 1 year or more, or once every month if the insured has alife expectancy of less than 1 year. The provider or broker shall explain theprocedure for those contacts at the time the settlement is entered into.

2. The limitations of subsection 1 do not apply tocontacts for purposes other than determining status of health.

3. A provider or broker is responsible for the acts ofhis authorized representative.

(Added to NRS by 2001, 2173)

NRS 688C.320 Confidentialityof medical information. All medical informationsolicited or obtained by a licensee under this chapter is subject to other lawsof this state relating to the confidentiality of the information.

(Added to NRS by 2001, 2173)

NRS 688C.330 Noticeof transfer of ownership or change of beneficiary of viaticated policy. If a provider of viatical settlements transfers ownershipor changes the beneficiary of a viaticated policy, he shall inform the insuredof the transfer or change within 20 days after it occurs.

(Added to NRS by 2001, 2172)

NRS 688C.340 Trustfor related provider: Required agreement between trustee and provider. The trustee of a trust for a related provider must agreein writing with the provider of viatical settlements that the provider isresponsible for ensuring compliance with all statutory and regulatoryrequirements and that the trustee will make all records and files related toviatical settlements available to the Commissioner as if those records andfiles were maintained directly by the provider.

(Added to NRS by 2001, 2168)

ADVERTISING

NRS 688C.350 Applicabilityand interpretation of provisions. NRS 688C.350 to 688C.430, inclusive, apply to advertisingof viatical settlements or related services intended for dissemination in thisstate, including advertising on the Internet which is viewed by persons in thisstate. To the extent that federal regulation establishes requirements fordisclosure, those sections must be so interpreted as to eliminate or minimizeconflict with the federal requirements.

(Added to NRS by 2001, 2174)

NRS 688C.360 Establishmentand maintenance by licensee of system of control; responsibility foradvertisements. Each licensee under thischapter shall establish and continuously maintain a system of control over thecontent, form and method of dissemination of all advertisements of itscontracts and services. Each advertisement is the responsibility of thelicensee as well as the person who creates or presents it. A system of controlmust include notification to persons authorized by the licensee who disseminateadvertisements, at least annually, of the requirements and procedures forapproval before use of any advertisements not furnished by the licensee.

(Added to NRS by 2001, 2174)

NRS 688C.370 Avoidanceof deception. An advertisement must betruthful and not misleading in fact or by implication. The form and content ofan advertisement for viatical settlements must be sufficiently complete andclear to avoid deception. An advertisement may not have a capacity or tendencyto mislead or deceive, as determined by the Commissioner from the overallimpression it may reasonably be expected to create upon a person of averageeducation or intelligence in the segment of the public to which it is directed.

(Added to NRS by 2001, 2175)

NRS 688C.380 Textof information required to be disclosed; use of misleading omissions, languageor illustrations; use of name or title of insurer or policy; prohibitedstatements, implications and words.

1. The information required to be disclosed under NRS 688C.350 to 688C.430, inclusive, may not beminimized, obscured, presented ambiguously or so intermingled with other textof an advertisement as to be confusing or misleading.

2. An advertisement may not omit material informationor use language or illustrations if the omission or use has a capacity ortendency to, or does, mislead viators as to the nature or extent of anybenefit, loss covered, premium payable or effect on federal or state taxes.Making a viatical settlement available for inspection before it is consummated,or offering to refund payment if the viator is not satisfied within the periodprescribed in NRS 688C.300, does notremedy misleading statements.

3. An advertisement may not use the name or title ofan insurer or policy unless the advertisement has been approved by the insurer.

4. An advertisement may not state or imply thatinterest charged on an accelerated death benefit or loan on a policy is unfairor in any way improper.

5. The words free, no additional cost or words ofsimilar import may not be used with respect to any benefit or service unlesstrue.

(Added to NRS by 2001, 2175)

NRS 688C.390 Useof testimonial, appraisal, analysis, endorsement or statistical information.

1. A testimonial, appraisal or analysis used in anadvertisement must be genuine, represent the present opinion of the author,apply to the viatical settlement advertised, if any, and be reproduced withsufficient completeness to avoid misleading viators. In using a testimonial,appraisal or analysis, a licensee under this chapter makes the statementscontained therein his own, and the statements must satisfy the requirements of NRS 688C.350 to 688C.430, inclusive.

2. If the person making a testimonial, appraisal,analysis or endorsement has a financial interest in the provider of viaticalsettlements or a related organization, or receives a benefit other thanrequired wages, that fact must be prominently disclosed in the advertisement.

3. An advertisement may not state or imply that aviatical settlement, benefit or service has been approved or endorsed by agroup, society or other organization unless that is the fact and anyrelationship between the organization and the provider of viatical settlementsis disclosed. If the organization is owned, controlled or managed by theprovider, or receives any payment or other consideration from the provider formaking the endorsement or testimonial, that fact must be disclosed in theadvertisement.

4. An advertisement may not contain statisticalinformation unless it accurately reflects recent and relevant facts. The sourceof all statistics used in an advertisement must be identified.

(Added to NRS by 2001, 2175)

NRS 688C.400 Prohibiteddisparagement. An advertisement may not disparageinsurers, providers of insurance, other providers or brokers of viatical settlements,policies, services or methods of marketing.

(Added to NRS by 2001, 2175)

NRS 688C.410 Identificationof provider and settlement; statement of name of licensee.

1. The name of the provider of viatical settlementsmust be clearly identified in an advertisement about him or his viaticalsettlements. If a viatical settlement is advertised, it must be identified bynumber or other appropriate description. If an application is part of anadvertisement, the name of the provider must be shown on the application.

2. An advertisement may not use a trade name,designation of a group, name of a parent or particular division of a providerof viatical settlements, service mark, slogan or other device or referencewithout disclosing the identity of the provider of viatical settlementslicensed under this chapter if the advertisement would have the capacity ortendency to mislead as to his true identity or create the impression that an organizationother than the licensee would have a responsibility for the financial obligationunder a viatical settlement. The name of the licensee must be stated in alladvertisements.

(Added to NRS by 2001, 2176)

NRS 688C.420 Useof words, symbols or physical materials similar to those of governmentalprogram or agency; creation of impression of governmental recommendation orendorsement; statements regarding licensing.

1. An advertisement may not use a combination ofwords, symbols or physical materials that by their content, phraseology, shape,color or other characteristic are so similar to a combination of words, symbolsor physical materials used by a governmental program or agency, or otherwiseappear to be of such a nature, that they tend to mislead viators into believingthat the solicitation is connected with a governmental program or agency. Anadvertisement may not create the impression that a provider of viaticalsettlements, his financial condition or business practices, the payment of hisclaims or the merit, desirability or advisability of his viatical settlementsis recommended or endorsed by a governmental authority.

2. An advertisement may state that a provider ofviatical settlements is licensed in the state in which the advertisementappears, if it does not imply that competing providers are not so licensed. Theadvertisement may suggest consulting the licensees website or communicatingwith the Commissioner to ascertain whether the state requires licensing and, ifso, whether a particular provider or broker of viatical settlements islicensed.

(Added to NRS by 2001, 2176)

NRS 688C.430 Disclosuresrequired when emphasizing speed of viatication or monetary amounts available.

1. If an advertiser emphasizes the speed with whichviatication will occur, the advertisement must disclose the average time fromcompleted application to date of offer and from acceptance of offer to receiptof funds by the viator.

2. If an advertiser emphasizes the monetary amountsavailable to viators, the advertisement must disclose the average purchaseprice as a fraction of face value obtained by viators who contracted with theadvertiser during the preceding 6 months.

(Added to NRS by 2001, 2176)

UNLAWFUL ACTS; FRAUD; ENFORCEMENT

NRS 688C.440 Unlawfulacts. It is unlawful knowingly orintentionally:

1. For any person to interfere with the enforcement ofthe provisions of this chapter or an investigation of a possible violation ofthose provisions.

2. For a person engaged in the business of viaticalsettlements to permit any person convicted of a felony involving dishonesty orbreach of trust to participate in that business.

(Added to NRS by 2001, 2177)

NRS 688C.450 Feloniousacts. It is a category D felony, and theoffender shall be punished as provided in NRS193.130, for any person, knowingly or with intent to defraud, to do any ofthe following acts in order to deprive another of property or for his ownpecuniary gain:

1. Present, cause to be presented or prepare withknowledge or belief that it will be presented, false information to or by aprovider or broker of viatical settlements, a financing agent, an insurer, aprovider of insurance or any other person, or to conceal information, as partof, in support of or concerning a fact material to:

(a) An application for the issuance of a policy orviatical settlement;

(b) The underwriting of a policy or viaticalsettlement;

(c) A claim for payment or other benefit under a policyor viatical settlement;

(d) A premium paid on a policy;

(e) A payment or change of beneficiary or ownershippursuant to a policy or viatical settlement;

(f) The reinstatement or conversion of a policy;

(g) The solicitation, offer or effectuation of a policyor viatical settlement; or

(h) The issuance of written evidence of a policy orviatical settlement.

2. In furtherance of a fraud or to prevent detectionof a fraud:

(a) Remove, conceal, alter, destroy or sequester fromthe Commissioner assets or records of a licensee under this chapter or otherperson engaged in the business of viatical settlements;

(b) Misrepresent or conceal the financial condition ofa licensee, a financing agent, an insurer or other person;

(c) Transact the business of viatical settlements inviolation of this chapter; or

(d) File with the Commissioner or analogous officer ofanother jurisdiction a document containing false information or otherwise concealinformation about a material fact from the Commissioner or other officer.

3. Present, cause to be presented or prepare withknowledge or belief that it will be presented to or by a provider or broker ofviatical settlements, a financing agent, an insurer, a provider of insurance orany other person, in connection with a viatical settlement or transaction ofinsurance, a policy fraudulently by the insured or owner or an agent of either.

4. Embezzle, steal, misappropriate or convert money,premiums, credits or other property of a provider of viatical settlements, aviator, an insurer, an insured, an owner of a policy or other person engaged inthe business of viatical settlements or insurance.

5. Attempt to commit, assist, aid, abet or conspire tocommit an act or omission described in subsections 1 to 4, inclusive.

(Added to NRS by 2001, 2176)

NRS 688C.460 Provisionto Commissioner of information regarding felonious acts.

1. A person engaged in the business of viaticalsettlements who knows or reasonably believes that a violation of NRS 688C.450 is being, has been or willbe committed shall promptly report the facts and circumstances pertaining tothe violation to the Commissioner.

2. Any other person who knows or reasonably believesthat a violation of NRS 688C.450 isbeing, has been or will be committed may furnish to the Commissioner theinformation required by the Commissioner.

(Added to NRS by 2001, 2177)

NRS 688C.470 Immunityof persons providing information regarding felonious acts.

1. Except as otherwise provided in subsection 2, aperson furnishing information of the kind described in NRS 688C.460 is immune from liability andcivil action if the information is furnished to or received from:

(a) The Commissioner or his employees, agents orrepresentatives;

(b) Another federal, state or local law enforcement orregulatory officer or his employees, agents or representatives;

(c) Another person involved in the prevention ordetection of violations of NRS 688C.450or similar offenses or his employees, agents or representatives;

(d) The National Association of Insurance Commissionersor other regulatory body overseeing life insurance or viatical settlements, orits employees, agents or representatives; or

(e) The insurer that issued the policy concerned in theinformation.

2. The immunity provided in subsection 1 does notextend to a statement made with actual malice. In an action brought against aperson for filing a report or furnishing other information concerning aviolation of NRS 688C.450, theplaintiff must plead specifically that the defendant acted with actual malice.

3. This section does not supplant or modify any otherprivilege or immunity at common law or under another statute enjoyed by aperson described in subsection 1.

(Added to NRS by 2001, 2178)

NRS 688C.480 Confidentialityand disclosure of certain documents and information regarding felonious acts.

1. A document or information furnished pursuant to NRS 688C.470 or obtained by theCommissioner in an investigation of an actual or suspected violation of NRS 688C.450 is confidential andprivileged, is not a public record and is not subject to discovery or subpoenain a civil action or criminal prosecution.

2. Subsection 1 does not prohibit the Commissionerfrom disclosing documents or evidence so furnished or obtained:

(a) In an administrative or judicial proceeding toenforce a statute administered by him;

(b) To another federal, state or local law enforcementor regulatory officer, another person involved in the prevention or detectionof violations of NRS 688C.450, orsimilar offenses, or the National Association of Insurance Commissioners; or

(c) To a person engaged in the business of viaticalsettlements who is aggrieved by the violation.

3. Disclosure of a document or evidence undersubsection 2 does not abrogate or modify the privilege covering it undersubsection 1.

(Added to NRS by 2001, 2178)

NRS 688C.490 Establishment,maintenance and modification by licensees of certain protective measuresagainst fraud; confidentiality of plan submitted to Commissioner.

1. Each licensee under this chapter shall establishand maintain protective measures against fraud which are reasonably calculatedto prevent, detect and assist in the prosecution of violations of NRS 688C.450. The Commissioner may order,or a licensee may request and the Commissioner may approve, modifications ofthe measures otherwise required under this section, more or less restrictivethan those measures, as necessary to protect against fraud. Required measuresare employment of or contracting with investigators and submission of a plan tothe Commissioner which includes:

(a) A description of the procedures for detecting andinvestigating possible violations of NRS688C.450 and for resolving inconsistencies between medical records andapplications for insurance;

(b) A description of the procedures for reportingpossible violations to the Commissioner;

(c) A description of the plan for educating andtraining underwriters and other personnel against fraud; and

(d) A description or chart of the organizationalarrangement of the personnel responsible for detecting and investigatingpossible violations of NRS 688C.450and for resolving inconsistencies between medical records and applications forinsurance.

2. A plan submitted to the Commissioner pursuant tosubsection 1 is privileged and confidential, not a public record and notsubject to discovery or subpoena in a civil action or criminal prosecution.

(Added to NRS by 2001, 2178)

NRS 688C.500 Statementrequired on application or contract for settlement. Anapplication or contract for a viatical settlement, however transmitted, mustcontain a statement substantially as follows: A person who knowingly presentsfalse information in an application for a viatical settlement is guilty ofinsurance fraud and subject to fine and imprisonment. The lack of such astatement is not a defense in a prosecution for violation of NRS 688C.450.

(Added to NRS by 2001, 2177)

NRS 688C.510 Injunctiveand other relief; administrative fine; restitution; civil action.

1. In addition to the penalties and other means ofenforcement provided under this chapter:

(a) If a person violates a provision of this chapter orof a regulation adopted under this chapter, the Commissioner may seek aninjunction and apply for temporary and permanent orders he determines to benecessary to restrain the violator.

(b) A person who violates a provision of this chapteris subject to an administrative fine of not more than $1,000 for eachviolation.

(c) In addition to a criminal penalty imposed, thecourt shall order restitution to the person aggrieved by the violation.

2. A person aggrieved by a violation of this chaptermay bring a civil action against the violator to recover the damages suffered.

(Added to NRS by 2001, 2179)

 

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