2015 New York Laws
ISC - Insurance
Article 78 - (Insurance) LIFE SETTLEMENTS
7813 - General rules.

  7813. General rules. (a) A life settlement provider entering into a
  life settlement contract shall first obtain a written consent  from  the
  insured  to  the release of the insured's medical records subject to the
  limitations contained in section seven thousand  eight  hundred  ten  of
  this article.
(b)  The  insurer  shall  respond  to  a  request  for verification of
  coverage submitted by a life settlement provider, life settlement broker
  or life settlement intermediary within fifteen days after the  date  the
  request   is   received.  The  insurer  shall  complete  and  issue  the
  verification of coverage or indicate the  specific  reasons  why  it  is
  unable to respond.  In its response, the insurer shall indicate whether,
  based  on  the  medical  evidence and documents provided, the insurer is
  pursuing or intends to pursue an investigation regarding the validity of
  the policy.
(c) The life settlement provider shall  give  written  notice  to  the
  insurer that issued the policy within ten days after the life settlement
  contract is executed by all parties.
(d)   Unless   the  insurer  is  pursuing  or  intends  to  pursue  an
  investigation, the insurer shall, within fifteen days of  receipt  of  a
  request  for  a change of ownership or assignment used to effectuate the
  transfer or assignment of the owner's rights or benefits under a  policy
  to  a  life  settlement  provider,  process  the  change of ownership or
  assignment and notify the life settlement provider and  the  owner  that
  the transfer or assignment has been effectuated.
(e)  If a life settlement broker performs any activity required of the
  life settlement provider in this section  or  provides  any  disclosures
  required by section seven thousand eight hundred eleven of this article,
  then  the  life  settlement  provider  is  deemed to have performed that
  activity or provided that disclosure.
(f) All medical information solicited or obtained by any  licensee  or
  any other person shall be subject to the provisions applicable to health
  care  providers  under  the  public  health  law and all applicable laws
  relating to confidentiality of medical information,  provided  that,  to
  the  extent  that  this  chapter provides for greater confidentiality of
  medical information, this chapter shall govern.
(g)(1) Every life settlement contract shall provide that the owner has
  an unconditional right to rescind the life settlement contract from  the
  time  of  execution of the contract until fifteen days after the receipt
  of the life settlement  proceeds  by  the  owner  by  giving  notice  of
  rescission  to the life settlement provider by midnight of the fifteenth
  day.
(2) Within five days after receipt of the notice  of  rescission,  the
  life  settlement provider shall provide a written statement to the owner
  itemizing the amount of all life settlement proceeds and  any  premiums,
  loans  and  loan interest paid or to be paid as of a date certain as may
  be requested by the owner.
(3) Within fifteen days after the receipt  of  the  written,  itemized
  statement  by  the  owner, the owner must repay all such life settlement
  proceeds and any premiums, loans and loan  interest  paid  by  the  life
  settlement provider.
(4)  If  the  insured  dies  during  the  rescission  period, the life
  settlement contract shall be deemed to have been rescinded,  subject  to
  repayment  of  all  life settlement proceeds and any premiums, loans and
  loan interest paid by the life settlement provider.
(5) Within five days after receipt of notice of  the  insured's  death
  during the rescission period, the life settlement provider shall provide
  a  written  statement  to the owner or, if the owner is deceased, to the
  legal representative of the owner's estate, itemizing the amount of  all

  life  settlement proceeds and any premiums, loans and loan interest paid
  or to be paid as of a date certain as may be requested by the  owner  or
  the  legal representative of the owner's estate. As soon as practicable,
  the  owner  or  the owner's estate shall repay all such proceeds and any
  premiums, loans and loan interest paid by the life settlement provider.
(h) Within three  business  days  after  receipt  from  the  owner  of
  documents  to effect the transfer of the policy that is the subject of a
  life settlement contract, the life settlement provider shall deposit the
  proceeds of the life settlement contract into an escrow or trust account
  in a state or federally  chartered  financial  institution.  The  escrow
  agent  or  trustee shall be required to transfer the proceeds due to the
  owner within three business days of acknowledgement of the transfer from
  the insurer.
(i) Failure to tender the life settlement  contract  proceeds  to  the
  owner  by  the  date  disclosed  to  the  owner  shall  render  the life
  settlement contract voidable by the  owner  for  lack  of  consideration
  until the time the proceeds are tendered to and accepted by the owner. A
  failure  to  give  written  notice  of the right of rescission hereunder
  shall toll the right of rescission until thirty days after  the  written
  notice of the right of rescission has been given.
(j)(1)  No  person,  at  any  time  prior  to,  or at the time of, the
  application for, or issuance of, a policy, or during the two-year period
  commencing with the date of issuance of the policy, shall enter  into  a
  life  settlement contract, regardless of the date the compensation is to
  be provided and regardless of the date the assignment,  transfer,  sale,
  devise  or bequest of the policy is to occur. This prohibition shall not
  apply if the owner certifies to the life settlement provider that:
(A) the policy was issued upon  the  owner's  exercise  of  conversion
  rights  arising  out of a policy, provided the total of the time covered
  under the conversion policy plus the time covered under the prior policy
  is at least twenty-four months. The time covered under  a  group  policy
  shall be calculated without regard to a change in insurers, provided the
  coverage has been continuous and under the same group sponsorship; or
(B)  one  or  more  of  the  following conditions, for which the owner
  submits independent evidence to the life settlement provider, have  been
  met within the two-year period:
(i) the owner or insured is terminally or chronically ill;
(ii) the owner or insured disposes of ownership interests in a closely
  held  corporation,  pursuant  to  the terms of a buyout or other similar
  agreement in effect at the  time  the  insurance  policy  was  initially
  issued;
(iii) the owner's spouse dies;
(iv) the owner divorces his or her spouse;
(v)  the  owner  retires  from  full-time  employment or involuntarily
  ceases employment;
(vi) the owner becomes physically or mentally disabled and a physician
  determines that the  disability  prevents  the  owner  from  maintaining
  full-time employment;
(vii)  a  final  order,  judgment  or  decree is entered by a court of
  competent jurisdiction, on the application of a creditor of  the  owner,
  adjudicating  the  owner  bankrupt or insolvent, or approving a petition
  seeking reorganization of the owner or appointing a receiver, trustee or
  liquidator to all or a substantial part of the owner's assets; or
(viii) any other condition that the superintendent  may  determine  by
  regulation  to  be  an  extraordinary  circumstance for the owner or the
  insured.
(2) Copies of the independent evidence required by subparagraph (B) of
  paragraph one of this subsection shall be submitted to the insurer  when

  the  life  settlement  provider  submits  a  request  to the insurer for
  verification of coverage. The copies shall be accompanied by a letter of
  attestation from the life settlement provider that the copies  are  true
  and  correct  copies  of  the  documents received by the life settlement
  provider. Nothing  in  this  section  shall  prohibit  an  insurer  from
  exercising its right to contest the validity of any policy.
(3) For the purposes of this section a person is:
(A)  terminally  ill  if  the  individual  has an illness, sickness or
  physical condition that can reasonably be expected to result in death in
  twenty-four months or less; or
(B) chronically ill  if  that  individual  has  been  certified  by  a
  licensed health care practitioner as:
(i)  being  unable  to  perform  without  substantial  assistance from
  another individual at  least  two  activities  of  daily  living  (i.e.,
  eating,  toileting, transferring, bathing, dressing or continence) for a
  period of at least ninety days, due to a loss of functional capacity;
(ii) requiring substantial supervision to protect the individual  from
  threats  to  health  and safety due to severe cognitive impairment for a
  period of at least ninety days, due to a loss of functional capacity; or
(iii) having a level of disability similar to that described in clause
  (i) of this subparagraph, as determined by the United  States  Secretary
  of Health and Human Services.
(k)  Contacts  with  the  insured  for  the purpose of determining the
  health status of the insured by  a  licensed  life  settlement  provider
  after  the life settlement contract has been executed shall be made only
  by the licensed life settlement provider  or  licensed  life  settlement
  broker,  or  any authorized representative thereof, and shall be limited
  to once every three months for an insured with a life expectancy of more
  than one year, and to no more than once per month for an insured with  a
  life expectancy of one year or less.
(l) The life settlement broker shall represent only the owner and owes
  a  fiduciary duty to the owner, including a duty to act according to the
  owner's instructions and in the best interest of the owner.
(m) A life  settlement  provider,  life  settlement  broker,  or  life
  settlement  intermediary  shall  be  responsible  for the actions of its
  authorized representative.
(n)(1) A life settlement intermediary's services shall not be  limited
  to  life  settlement  providers  or  life  settlement  brokers  that are
  affiliates,  parents,   or   subsidiaries   of   the   life   settlement
  intermediary.
(2)  A  life  settlement  intermediary  shall  establish  and maintain
  systems, practices and procedures to ensure that:
(A) every transaction with an affiliate, parent or subsidiary  of  the
  life  settlement  intermediary is fair and equitable and conducted on an
  arms-length basis; and
(B)  an  affiliate,  parent  or  subsidiary  of  the  life  settlement
  intermediary  is  not granted or provided with preferential treatment or
  access to information or services that are not granted or provided to an
  unaffiliated life settlement provider or  life  settlement  broker  that
  conducts business with the life settlement intermediary.
(o)  A  life settlement provider may sell, assign, pledge or otherwise
  transfer the ownership of a settled  policy  only  to  a  licensed  life
  settlement  provider,  an accredited investor or qualified institutional
  buyer, financing entity, special purpose  entity,  or  related  provider
  trust;  provided,  however, a life settlement provider may sell, assign,
  pledge or otherwise transfer a beneficial interest in a  settled  policy
  to someone other than a life settlement provider licensed in this state,
  an  accredited  investor  or  qualified  institutional  buyer, financing

  entity, special purpose entity, or related provider trust if a  licensed
  life settlement provider continues to administer and service the settled
  policy  and  protects  the  privacy of the insured and owner pursuant to
  section seven thousand eight hundred ten of this article.
(p)  The  failure  to follow the provisions of this section shall be a
  defined violation under article twenty-four of this chapter.