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8. The name and address of the person responsible for monitoring the insured's
13condition, how often the monitoring is done, how the date of death is determined, and
14how and when the information will be transmitted to the purchaser.
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15(10) Disclosure to insurer. Before initiating a plan, transaction, or series of
16transactions, a broker or provider shall fully disclose to the insurer a plan,
17transaction, or series of transactions to which the broker or provider is a party to
18originate, renew, continue, or finance a policy with the insurer for the purpose of
19engaging in the business of life settlements at any time prior to, or during the first
205 years after, issuance of the policy.
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21(11) General requirements. (a) 1. Before entering into a life settlement
22contract, a provider shall obtain all of the following:
SB513,37,2523
a. If the owner is the insured, a written statement from a licensed attending
24physician that the owner is of sound mind and under no constraint or undue
25influence to enter into a life settlement contract.
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1b. A document in which the insured consents to the release of his or her medical
2records to a licensed provider, licensed broker, and the insurer that issued the policy
3covering the life of the insured.
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2. Within 20 days after an owner executes documents necessary to transfer any
5rights under a policy or within 20 days after the owner enters any agreement, option,
6promise, or any other form of understanding, express or implied, to settle the policy,
7the provider shall give written notice to the insurer that issued the policy that the
8policy has or will become a settled policy.
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3. The provider shall deliver a copy of the medical release required under subd.
101. b., a copy of the owner's application for the life settlement contract, the notice
11required under subd 2., and a request for verification of coverage to the insurer that
12issued the policy that is the subject of the life settlement. The provider shall use a
13form created by the National Association of Insurance Commissioners for
14verification of coverage unless the commissioner develops and approves another
15form.
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4. The insurer shall respond to a request for verification of coverage that is
17submitted on an approved form by a provider or broker within 30 calendar days after
18the date the request is received and shall indicate whether, based on the medical
19evidence and documents provided, the insurer intends to pursue an investigation
20regarding the validity of the insurance contract or possible fraud. The insurer shall
21accept a request for verification of coverage made on a form created by the National
22Association of Insurance Commissioners or any other form approved by the
23commissioner, and shall accept an original, facsimile, or electronic copy of the
24request and any accompanying signed authorization.
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15. Before or at the time of execution of the life settlement contract, the provider
2shall obtain a witnessed document in which the owner does all of the following:
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a. Consents to the life settlement contract.
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b. Represents that he or she has a complete understanding of the life settlement
5contract.
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c. Represents that he or she has a complete understanding of the benefits of the
7policy.
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d. Acknowledges that he or she is entering into the life settlement contract
9freely and voluntarily.
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e. If applicable, acknowledges that the insured has a terminal or chronic illness
11and that the terminal or chronic illness or condition was diagnosed after the policy
12was issued.
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6. If a broker performs any of the activities required in subd. 1., 2., 3., or 5., the
14provider shall be considered to have performed that activity.
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(b) All medical information solicited or obtained by any licensee shall be subject
16to the applicable provisions of state law relating to confidentiality of medical
17information, including s. 610.70.
SB513,40,1418
(c) All life settlement contracts entered into in this state shall provide the
19owner with an absolute right to rescind the contract before the earlier of 30 calendar
20days after the date on which the life settlement contract is executed by all parties or
2115 calendar days after the life settlement proceeds have been sent to the owner as
22provided in par. (d). Rescission by the owner may be conditioned upon the owner both
23giving notice and repaying to the provider, within the rescission period, all proceeds
24of the settlement and any premiums, loans, and loan interest paid by or on behalf of
25the provider in connection with or as a consequence of the life settlement. If the
1insured dies during the rescission period, the life settlement contract is rescinded,
2subject to repayment, within 60 calendar days after the death of the insured, by the
3owner or the owner's estate to the provider or purchaser of all life settlement
4proceeds and any premiums, loans, and loan interest that have been paid by the
5provider or purchaser. If a life settlement contract is rescinded under this
6paragraph, ownership of the policy shall revert to the owner or the owner's estate if
7the owner is deceased, irrespective of any transfer of ownership of the policy by the
8owner, provider, or any other person. In the event of any rescission, if the provider
9has paid commissions or other compensation to a broker in connection with the
10rescinded life settlement contract, the broker shall refund the commissions and
11compensation to the provider within 5 business days following receipt of written
12demand from the provider, which demand shall be accompanied by the applicable
13document initiating the rescission within the rescission period, either the owner's
14notice of rescission or the notice of death of the insured.
SB513,41,515
(d) The provider shall instruct the owner to send the executed documents
16required to effect the change in ownership, assignment, or change in beneficiary
17directly to the independent escrow agent. Within 3 business days after the date the
18independent escrow agent receives the documents, or after the date the provider
19receives the documents if the owner erroneously provides the documents directly to
20the provider, the provider shall pay or transfer the proceeds of the life settlement into
21an escrow or trust account that is maintained in a state or federally chartered
22financial institution whose deposits are insured by the Federal Deposit Insurance
23Corporation and managed by an independent trustee or escrow agent. Upon
24payment of the life settlement proceeds into the escrow account, the independent
25escrow agent shall deliver the original change in ownership, assignment, or change
1in beneficiary form to the provider or related provider trust or other designated
2representative of the provider. Upon the escrow agent's receipt of acknowledgement
3of the properly completed transfer of ownership, assignment, or designation of
4beneficiary from the insurer, the independent escrow agent shall pay the life
5settlement proceeds to the owner.
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(e) Failure to tender the life settlement proceeds to the owner within the time
7set forth in the disclosure under sub. (8) (a) 1. g., renders the life settlement contract
8voidable by the owner for lack of consideration until the time the proceeds are
9tendered to and accepted by the owner. Funds are sent by a provider to an owner as
10of the date that the escrow agent either releases funds for wire transfer to the owner
11or places a check for delivery to the owner via the U.S. postal service or other
12nationally recognized delivery service.
SB513,41,2213
(f) For the purpose of determining the health status of the insured after the life
14settlement has occurred, only the provider or broker licensed in this state or a person
15it authorizes may contact the insured. Contact with the insured shall be limited to
16once every 3 months for an insured with a life expectancy of more than one year, and
17to no more than once per month for an insured with a life expectancy or one year or
18less. The provider or broker shall explain the procedure for the contacts to the owner
19at the time the life settlement contract is entered into. The limitations in this
20paragraph do not apply to any contacts with an insured for reasons other than
21determining the insured's health status. Providers and brokers shall be responsible
22for the actions of a person they authorize to make the contact.
SB513,42,2
23(12) Prohibited contracts; required form; acknowledgement; fiduciary duty. 24(a) No person may enter into a life settlement contract at any time before the
25application or issuance of a policy that is the subject of a life settlement contract or
1within a 5-year period commencing with the date of issuance of the policy unless any
2of the following conditions have been met:
SB513,42,83
1. The owner certifies to the provider that, within the 5-year period, the policy
4was issued upon the owner's exercise of conversion rights arising out of a group or
5individual policy, provided the total of the time covered under the conversion policy
6plus the time covered under the prior policy is at least 60 months. The time covered
7under the group policy shall be calculated without regard to any change in insurance
8carriers, if the coverage has been continuous and under the same group sponsorship.
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2. The owner submits independent evidence to the provider that any of the
10following conditions have been met within the 5-year period:
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a. The owner or insured is terminally or chronically ill.
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b. The owner's spouse or child dies.
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c. The owner divorces his or her spouse.
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d. The owner retires from full-time employment.
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e. The owner becomes physically or mentally disabled and a physician
16determines that the disability prevents the owner from maintaining full-time
17employment.
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f. A final order, judgment, or decree is entered by a court of competent
19jurisdiction, on the application of a creditor of the owner, adjudicating the owner
20bankrupt or insolvent, approving a petition seeking reorganization of the owner, or
21appointing a receiver, trustee, or liquidator to all or a substantial part of the owner's
22assets.
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g. The sole beneficiary of the policy is a family member of the owner and the
24beneficiary dies.
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1h. The owner is a charitable organization with an insurable interest that has
2received from the federal Internal Revenue Service a determination letter that is
3currently in effect stating that the charitable organization is described in section
501 4(c) (3) of the Internal Revenue Code and is exempt from federal income taxation
5under section
501 (a) of the Internal Revenue Code.
SB513,43,86
i. The owner or insured disposes of ownership interests in a closely held
7corporation pursuant to the terms of a buyout or other similar agreement in effect
8at the time the policy was initially issued.
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j. Other circumstances exist that are established as eligible exemptions by the
10commissioner by rule, including substantial adverse financial circumstances or
11other factors substantially affecting the owner.
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3. The owner certifies to the provider that the owner is entering into a life
13settlement contract more than 2 years after the date of issuance of a policy and, with
14respect to the policy, at all times before the date that is 2 years after policy issuance
15all of the following conditions are met:
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a. Policy premiums are funded exclusively with unencumbered assets,
17including an interest in the policy being financed only to the extent of its net cash
18surrender value, provided by, or full recourse liability incurred by, the owner or a
19person described in sub. (1) (j) 2. e.
SB513,43,2220
b. There is no agreement or understanding with any other person to guarantee
21any liability or to purchase, or stand ready to purchase, the policy, including through
22an assumption or forgiveness of a loan.
SB513,43,2323
c. Neither the insured nor the policy has been evaluated for settlement.
SB513,44,424
(b) Copies of the independent evidence described in par. (a) 2. and documents
25required by sub. (11) (a) shall be submitted to the insurer when the provider entering
1into a life settlement contract with an owner submits a request to the insurer for
2verification of coverage. The provider shall submit, along with the copies, a letter of
3attestation from the provider that the copies are true and correct copies of the
4documents received by the provider.
SB513,44,95
(c) If the provider submits to the insurer a copy of the owner's certification
6under par. (a) 1. or 3. or independent evidence under par. (a) 2. when the provider
7submits a request to the insurer to effect the transfer of the policy to the provider,
8the copy conclusively establishes that the life settlement contract satisfies the
9requirements of this subsection and the insurer shall timely respond to the request.
SB513,44,1410
(d) No insurer may, as a condition of responding to a request for verification of
11coverage or effecting the transfer of a policy pursuant to a life settlement contract,
12require that the owner, insured, provider, or broker sign any form, disclosure,
13consent, or waiver that has not been expressly approved by the commissioner for use
14in connection with life settlement contracts in this state.
SB513,44,1815
(e) Upon receipt of a properly completed request for change of ownership or
16beneficiary of a policy, the insurer shall respond in writing within 30 calendar days
17with acknowledgement confirming that the change has been effected or specifying
18the reasons why the requested change cannot be processed.
SB513,44,2119
(f) A broker represents only the owner and owes a fiduciary duty to the owner
20to act according to the owner's instructions and in the best interest of the owner,
21notwithstanding the manner in which the broker is compensated.
SB513,44,25
22(13) Prohibited practices and conflicts of interest. (a) No person may enter
23into a life settlement contract if the person knows or reasonably should have known
24that the policy that is the subject of the life settlement contract was obtained by
25means of a false, deceptive, or misleading application for the policy.
SB513,45,3
1(b) No person may engage in any transaction, practice, or course of business if
2the person knows or reasonably should know that the intent is to avoid the notice
3requirements of this section.
SB513,45,54
(c) No person may engage in any fraudulent act or practice in connection with
5any transaction relating to any life settlement involving an owner.
SB513,45,76
(d) No person may issue, solicit, market, or otherwise promote the purchase of
7a policy for the primary purpose of or with a primary emphasis on settling the policy.
SB513,45,208
(e) No person may enter into a premium finance agreement with any person
9or agency, or any person affiliated with such person or agency, pursuant to which the
10person who is providing premium financing receives any proceeds, fees, or other
11consideration, directly or indirectly, from the policy or owner of the policy or any other
12person with respect to the premium finance agreement or any life settlement
13contract or other transaction related to the policy that is in addition to the amounts
14required to pay the principal, interest, and service charges related to policy
15premiums pursuant to the premium finance agreement or subsequent sale of the
16agreement. Any payments, charges, fees, or other amounts in addition to the
17amounts required to pay the principal, interest, and service charges related to policy
18premiums paid under the premium finance agreement shall be remitted to the
19original owner of the policy or to the owner's estate if the owner is not living at the
20time of the determination of the overpayment.
SB513,45,2521
(f) With respect to any life settlement contract or policy, no broker may
22knowingly solicit an offer from, effectuate a life settlement with, or make a sale to
23any provider, purchaser, financing entity, or related provider trust that is controlling,
24controlled by, or under common control with the broker unless the relationship is
25disclosed to the owner.
SB513,46,6
1(g) With respect to any life settlement contract or policy, no provider may
2knowingly enter into a life settlement contract with an owner, if, in connection with
3the life settlement contract, anything of value will be paid to a broker that is
4controlling, controlled by, or under common control with the provider or the
5purchaser, financing entity, or related provider trust that is involved in the life
6settlement contract unless the relationship is disclosed to the owner.
SB513,46,107
(h) No life settlement promotional, advertising, or marketing materials may
8represent that the insurance is "free" for any period of time, or include any reference
9that would cause an owner to reasonably believe that the insurance is free for any
10period of time.
SB513,46,1411
(i) No producer, insurer, broker, or provider may make any statement or
12representation to an applicant or policyholder in connection with the sale or
13financing of a policy to the effect that the insurance is free or without cost to the
14policyholder for any period of time unless provided in the policy.
SB513,46,18
15(14) Advertisements of life settlement contracts and purchase agreements. 16(a) This subsection applies to any advertising of life settlement contracts, purchase
17agreements, or related products or services intended for dissemination in this state,
18including Internet advertising viewed by persons located in this state.
SB513,46,2119
(b) If disclosure requirements are established by federal regulation, this
20subsection shall be interpreted so as to minimize or eliminate conflict with federal
21regulation.
SB513,46,2322
(c) The commissioner may require a broker or provider to submit advertising
23material at any time.
SB513,47,724
(d) Every licensee shall establish and maintain a system of control over the
25content, form, and method of dissemination of all advertisements of its life
1settlement contracts, products, and services. All advertisements, regardless who
2wrote, created, designed, or presented the advertisement, shall be the responsibility
3of the licensee and the person who created or presented the advertisement. The
4system of control shall include regular routine notification of the requirements and
5procedures for approval prior to use of any advertisements not furnished by the
6licensee, at least once a year, to producers, brokers, and others authorized by the
7licensee who disseminate advertisements.
SB513,47,158
(e) Advertisements shall be truthful and not misleading in fact or by
9implication. The form and content of an advertisement of a life settlement contract
10or purchase agreement, product, or service shall be sufficiently complete and clear
11so as to avoid deception. The advertisement may not have the capacity or tendency
12to mislead or deceive. The commissioner shall determine whether an advertisement
13has the capacity or tendency to mislead or deceive from the overall impression that
14the advertisement may be reasonably expected to create upon a person of average
15education or intelligence within the segment of the public to which it is directed.
SB513,47,1816
(f) Disclosures that are required under this subsection may not be minimized,
17rendered obscure, presented in an ambiguous fashion, or intermingled with the text
18of the advertisement so as to be confusing or misleading.
SB513,47,1919
(g) An advertisement may not do any of the following:
SB513,47,2420
1. Omit material information or use words, phrases, statements, references, or
21illustrations if the omission or use has the capacity, tendency, or effect of misleading
22or deceiving an owner, purchaser, or prospective purchaser as to the nature or extent
23of any benefit, covered loss, premium payable, or state or federal tax consequences.
24A misleading statement is not remedied by any of the following:
SB513,48,2
1a. Making the life settlement contract or purchase agreement available for
2inspection prior to consummation of the sale.
SB513,48,33
b. Offering to refund payment if the owner is not satisfied.
SB513,48,54
c. Including in the life settlement contract or purchase agreement a "free look"
5period that satisfies or exceeds the requirements of law.
SB513,48,76
2. Use the name or title of a life insurance company or a policy unless the
7advertisement has been approved by the insurer.
SB513,48,108
3. Represent that premium payments will not be required on the policy that is
9the subject of a life settlement contract or purchase agreement in order to maintain
10the policy unless that is the fact.
SB513,48,1211
4. State or imply that interest charged on an accelerated death benefit or loan
12is unfair, inequitable, or, in any manner, an incorrect or improper practice.
SB513,48,1613
5. Use the words "free," "no cost," "without cost," "no additional cost," "at no
14extra cost," or similar words or phrases with respect to any benefit or services, unless
15true. An advertisement may specify the charge for a benefit or service or may state
16that a charge is included in the payment or use other appropriate language.
SB513,49,217
6. Use testimonials, appraisals, analyses, or endorsements in advertisements
18unless they are genuine; represent the current opinion of the author; are applicable
19to the life settlement contract or purchase agreement, product, or service advertised;
20and are reproduced with sufficient completeness to avoid misleading or deceiving
21prospective owners or purchasers as to the nature or scope of the testimonial,
22appraisal, analysis, or endorsement. Any financial interest in or benefit received
23from the licensee by the person making a testimonial, appraisal, or analysis, directly
24or indirectly, shall be prominently disclosed in the advertisement. If an endorsement
25refers to benefits received under a life settlement contract or purchase agreement,
1the licensee shall retain all pertinent information forming a basis of the endorsement
2for a period of 5 years following its use.
SB513,49,93
7. State or imply that a life settlement contract or purchase agreement, benefit,
4or service has been approved or endorsed by a group, society, association, or other
5organization unless that is the fact and unless any relationship between the
6organization and the licensee is disclosed. If the entity making the endorsement is
7owned, controlled, or managed by the licensee, or receives any payment or other
8consideration from the licensee for making an endorsement or testimonial, that fact
9must be disclosed in the advertisement.
SB513,49,1210
8. Contain statistical information unless the information accurately reflects
11recent and relevant facts. An advertisement shall identify the source of all statistics
12used in the advertisement.
SB513,49,1413
9. Disparage insurers, providers, brokers, producers, policies, services, or
14methods of marketing.
SB513,49,2215
10. Omit the name of the actual licensee from any advertisement. No
16advertisement may use a trade name, group designation, name of the parent
17company of a licensee, name of a division of a life settlement licensee, service mark,
18slogan, symbol, or other device or reference if the advertisement would have the
19capacity or tendency to mislead or deceive as to the true identity of the licensee or
20to create the impression that any entity other than the licensee would have any
21responsibility for the financial obligation under a life settlement contract or
22purchase agreement.
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11. Use any combination of words, symbols, or physical materials that by the
24their content, phraseology, shape, color, or other characteristics are so similar to a
25combination of words, symbols, or physical materials used by a government program
1or agency that they tend to mislead or deceive prospective owners or purchasers into
2believing the advertisement is in some manner connected with a government
3program or agency.
SB513,50,84
12. Exaggerate the fact that a licensee under this section is licensed in the state
5where the advertisement appears or suggest or imply that competing licensees may
6not be so licensed. An advertisement may ask the audience to consult the licensee's
7Web site or contact the office of the commissioner for licensing requirements and the
8status of a license.
SB513,50,129
13. Create the impression, directly or indirectly, that a licensee; its business
10practices or methods of operation; the merits desirability or advisability of any life
11settlement contract or purchase agreement; or any life insurance company are
12recommended, approved, or endorsed by any government entity.
SB513,50,1613
14. Emphasize the speed with which the settlement will occur, except that the
14advertisement may disclose the average time from the completion of the application
15to the date of offer and from the acceptance of the offer to receipt of the settlement
16funds by the owner.
SB513,50,1917
15. Emphasize the dollar amounts available to an owner, except that the
18advertisement may disclose the average purchase price as a percent of the face value
19obtained by owners contracting with the licensee during the prior 6 months.
SB513,50,2520
(h) The name of the licensee shall be clearly identified in all advertisements
21about the licensee or its life settlement contracts, purchase agreements, products, or
22services. If any specific life settlement contract or purchase agreement of a licensee
23is advertised, the contract or agreement shall be identified either by form number
24or other appropriate description. If an application is part of the advertisement, the
25name of the provider shall be shown on the application.
SB513,51,1
1(15) Fraud prevention and control; fraudulent life settlement acts.
SB513,51,22
(a) No person may commit a fraudulent life settlement act.
SB513,51,53
(b) No person may knowingly or intentionally interfere with the enforcement
4of this subsection or sub. (13) or investigations of suspected or actual violations of this
5subsection or sub. (13).
SB513,51,86
(c) No person in the business of life settlements may knowingly or intentionally
7permit any person convicted of a felony involving dishonesty or breach of trust to
8participate in the business of life settlements.
SB513,51,139
(d) 1. Life settlement contracts, purchase agreements, and applications for life
10settlements, regardless of the form of transmission, shall contain the following
11statement or a substantially similar statement: "Any person who knowingly
12presents false information in an application for insurance, a life settlement, or a
13purchase agreement may be subject to civil and criminal penalties."
SB513,51,1514
2. A person may not use the lack of the statement required under subd. 1. as
15a defense to any prosecution for a violation of this subsection or sub. (13).
SB513,51,1916
(e) 1. Any person engaged in the business of life settlements having knowledge
17or a reasonable belief that a violation of this subsection or sub. (13) is being, will be,
18or has been committed shall provide to the commissioner the information required
19by, and in a manner prescribed by, the commissioner.
SB513,51,2320
2. Any other person having knowledge or a reasonable belief that a violation
21of this subsection or sub. (13) is being, will be, or has been committed may provide
22to the commissioner the information required by, and in a manner prescribed by, the
23commissioner.
SB513,52,324
(f) 1. In the absence of actual malice, no civil liability shall be imposed on and
25no cause of action shall arise from a person's furnishing information concerning
1suspected, anticipated, or completed violations of this subsection or sub. (13) or
2suspected, anticipated, or completed fraudulent insurance acts, if the information is
3provided to or received from any of the following:
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a. The commissioner or the commissioner's employees, agents, or
5representatives.
SB513,52,76
b. Federal, state, or local law enforcement or regulatory officials or their
7employees, agents, or representatives.
SB513,52,98
c. A person involved in the prevention and detection of fraud or that person's
9agents, employees, or representatives.