2013 New York Consolidated Laws
ISC - Insurance
Article 78 - (7801 - 7820) LIFE SETTLEMENTS
7812 - Life insurance applications.

 
    §  7812. Life insurance applications. (a) Without limiting the ability
  of an insurer to assess the insurability of a policy  applicant  and  to
  determine  whether  or not to issue the policy, and in addition to other
  questions an insurer may lawfully pose to a  life  insurance  applicant,
  insurers  may  inquire  in  the  application  for  insurance whether the
  proposed owner intends to pay premiums with the assistance of  financing
  from  a  lender  that  will  use the policy as collateral to support the
  financing.
    (b) The insurer may include the following notice to the applicant  and
  the  insured,  or  other notice acceptable to the superintendent, on the
  application or as an amendment  thereto:  "If  you  enter  into  a  loan
  arrangement  where  the  policy  is  used  as collateral, and the policy
  changes ownership at some point in the future  in  satisfaction  of  the
  loan, then the following may be true:
    (1)  a  change of ownership may lead to a person unknown to you owning
  an interest in the insured's life;
    (2) a change of ownership may limit your ability to purchase insurance
  in the future on the insured's life because there is a limit to how much
  coverage insurers will issue on one life;
    (3) if ownership of the life insurance policy changes, and you wish to
  obtain more insurance coverage on the insured's life in the future,  the
  insured's  higher  issue  age,  a  change in health status, and/or other
  factors may reduce the ability to obtain coverage and/or may  result  in
  significantly higher premiums; and
    (4)  you  should  consult  a  professional  advisor, since a change in
  ownership in satisfaction of the loan may result in tax consequences  to
  the owner."