The affiliation, if any, between the provider and the issuer of the policy to be settled.
The name, business address, and telephone number of the provider.
Any affiliation or contractual arrangements between the provider and the purchaser.
If a policy to be settled has been issued as a joint policy or involves family riders or any coverage of a life other than that of the insured under the policy to be settled, the possible loss of coverage on the other lives under the policy, together with a statement advising the owner to consult with the insurer issuing the policy for advice concerning the proposed life settlement.
The dollar amount of the current death benefit that will be payable to the provider under the policy. If known, the provider shall also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy, and the extent to which the owner's interest in those benefits will be transferred as a result of the life settlement contract.
That the funds will be escrowed with an independent 3rd party during the transfer process; the name, business address, and telephone number of the independent 3rd party escrow agent; and that the owner may inspect or receive copies of the relevant escrow or trust agreements or documents.
A broker shall disclose to the owner, either conspicuously displayed in the life settlement contract or in a separate document signed by the owner, at least all of the following information no later than the date the life settlement contract is signed by all parties:
The name, business address, and telephone number of the broker.
A full, complete, and accurate description of all offers, counteroffers, acceptances, and rejections related to the proposed life settlement contract.
A written statement of any affiliation or contractual arrangement between the broker and any person making an offer in connection with the proposed life settlement contract.
The amount of the broker's compensation, including anything of value paid or given to the broker for the placement of the policy.
If any portion of the broker's compensation is taken from a proposed life settlement, the total amount of the life settlement offer and the percentage of the life settlement comprised by the broker's compensation.
If the provider transfers ownership or changes the beneficiary of the policy, the provider shall communicate in writing the change in ownership or beneficiary to the insured within 20 days after the change.
A provider shall disclose to a purchaser, conspicuously displayed in the purchase agreement or in a separate document signed by the purchaser and provider, at least all of the following information prior to the date the purchase agreement is signed by all parties:
That the purchaser will receive no returns, including dividends and interest, until the insured dies and a death claim payment is made.
That the actual rate of return on a life settlement contract is dependent upon an accurate projection of the insured's life expectancy and the actual date of the insured's death and that an annual guaranteed rate of return is not determinable.
That the settled policy should not be considered a liquid purchase since it is impossible to predict the exact timing of its maturity and the funds are not available until the death of the insured and that there is no established secondary market for resale of a settled policy by the purchaser.
That the purchaser may lose all benefits or may receive substantially reduced benefits if the insurer goes out of business during the contract term of the life settlement investment.
That the purchaser is responsible for payment of the insurance premiums or other costs related to the policy, if required by the terms of the purchase agreement, even if the insured returns to health, and that the payments may reduce the purchaser's return. If a party other than the purchaser is responsible for the payment, the name and address of the party responsible for payment shall be disclosed.
The name, business address, and telephone number of the independent 3rd party providing escrow services and any relationship to the broker.
The amount of any trust fees or expenses to be charged the purchaser.
Whether the purchaser is entitled to a refund of all or part of the purchaser's investment under the purchase agreement if the policy is later determined to be null and void.
That group policies may contain limitations or caps in the conversion rights, that additional premiums may have to be paid if the policy is converted, the name of the party responsible for payment of any additional premiums, and that if a group policy is terminated and replaced by another group policy, there may be no right to convert the original coverage.
The risks associated with policy contestability, including the risk that the purchaser will have no claim or only a partial claim to death benefits should the insurer rescind the policy within the contestability period.
Whether the purchaser will be the owner of the policy in addition to being the beneficiary, and if the purchaser is the beneficiary only and not also the owner, the special risks associated with that status, including the risk that the beneficiary may be changed or the premium may not be paid.
The experience and qualifications of the person who determines the life expectancy of the insured, including in-house staff, independent physicians, and specialty firms that weigh medical and actuarial data, the information the projection is based on, and the relationship of the projection maker to the provider, if any.
At the time the disclosures in subd. 1.
are provided, the provider shall provide to the purchaser a brochure approved by the commissioner describing the process of the purchase of a settled policy.
A provider shall disclose to a purchaser, in a document signed by the purchaser and provider, at least all of the following no later than at the time of the assignment, transfer, or sale of all of or an interest in a policy:
All the life expectancy certifications obtained by the provider in the process of determining the price to be paid to the owner.
Whether the premium payments or other costs related to the policy have been escrowed and, if so, the date upon which the escrowed funds will be depleted, whether the purchaser will be responsible for payment of premiums after the depletion of escrowed funds, and the amount of the premium if the purchaser is responsible for payment.
Whether the premiums or other costs related to the policy have been waived and, if so, whether the purchaser will be responsible for payment of the premiums if the insurer that issued the policy terminates the waiver after purchase and, if so, the amount of the premiums.
Whether the type of policy offered or sold is whole life, term life, universal life, a group policy, or another type of policy, any additional benefits contained in the policy, and the current status of the policy.
If the policy is term insurance, the special risks associated with term insurance including the purchaser's responsibility for additional premiums if the owner continues the term policy at the end of the current term.
Whether the insurer that issued the policy has any additional rights that could negatively affect or extinguish the purchaser's rights under the purchase agreement and, if so, what those rights are and under what conditions those rights are activated.
The name and address of the person responsible for monitoring the insured's condition, how often the monitoring is done, how the date of death is determined, and how and when the information will be transmitted to the purchaser.
Disclosure to insurer.
Before initiating a plan, transaction, or series of transactions, a broker or provider shall fully disclose to the insurer a plan, transaction, or series of transactions to which the broker or provider is a party to originate, renew, continue, or finance a policy with the insurer for the purpose of engaging in the business of life settlements at any time prior to, or during the first 5 years after, issuance of the policy.
Before entering into a life settlement contract, a provider shall obtain all of the following:
If the owner is the insured, a written statement from a licensed attending physician that the owner is of sound mind and under no constraint or undue influence to enter into a life settlement contract.
A document in which the insured consents to the release of his or her medical records to a licensed provider, licensed broker, and the insurer that issued the policy covering the life of the insured.
Within 20 days after an owner executes documents necessary to transfer any rights under a policy or within 20 days after the owner enters any agreement, option, promise, or any other form of understanding, express or implied, to settle the policy, the provider shall give written notice to the insurer that issued the policy that the policy has or will become a settled policy.
The provider shall deliver a copy of the medical release required under subd. 1. b.
, a copy of the owner's application for the life settlement contract, the notice required under subd. 2.
, and a request for verification of coverage to the insurer that issued the policy that is the subject of the life settlement. The provider shall use a form created by the National Association of Insurance Commissioners for verification of coverage unless the commissioner develops and approves another form.
The insurer shall respond to a request for verification of coverage that is submitted on an approved form by a provider or broker within 30 calendar days after the date the request is received and shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation regarding the validity of the insurance contract or possible fraud. The insurer shall accept a request for verification of coverage made on a form created by the National Association of Insurance Commissioners or any other form approved by the commissioner, and shall accept an original, facsimile, or electronic copy of the request and any accompanying signed authorization.
Before or at the time of execution of the life settlement contract, the provider shall obtain a witnessed document in which the owner does all of the following:
Represents that he or she has a complete understanding of the life settlement contract.
Represents that he or she has a complete understanding of the benefits of the policy.
Acknowledges that he or she is entering into the life settlement contract freely and voluntarily.
If applicable, acknowledges that the insured has a terminal or chronic illness and that the terminal or chronic illness or condition was diagnosed after the policy was issued.
If a broker performs any of the activities required in subd. 1.
, or 5.
, the provider shall be considered to have performed that activity.
All medical information solicited or obtained by any licensee shall be subject to the applicable provisions of state law relating to confidentiality of medical information, including s. 610.70
All life settlement contracts entered into in this state shall provide the owner with an absolute right to rescind the contract before the earlier of 30 calendar days after the date on which the life settlement contract is executed by all parties or 15 calendar days after the life settlement proceeds have been sent to the owner as provided in par. (d)
. Rescission by the owner may be conditioned upon the owner both giving notice and repaying to the provider, within the rescission period, all proceeds of the settlement and any premiums, loans, and loan interest paid by or on behalf of the provider in connection with or as a consequence of the life settlement. If the insured dies during the rescission period, the life settlement contract is rescinded, subject to repayment, within 60 calendar days after the death of the insured, by the owner or the owner's estate to the provider or purchaser of all life settlement proceeds and any premiums, loans, and loan interest that have been paid by the provider or purchaser. If a life settlement contract is rescinded under this paragraph, ownership of the policy shall revert to the owner or the owner's estate if the owner is deceased, irrespective of any transfer of ownership of the policy by the owner, provider, or any other person. In the event of any rescission, if the provider has paid commissions or other compensation to a broker in connection with the rescinded life settlement contract, the broker shall refund the commissions and compensation to the provider within 5 business days following receipt of written demand from the provider, which demand shall be accompanied by the applicable document initiating the rescission within the rescission period, either the owner's notice of rescission or the notice of death of the insured.
The provider shall instruct the owner to send the executed documents required to effect the change in ownership, assignment, or change in beneficiary directly to the independent escrow agent. Within 3 business days after the date the independent escrow agent receives the documents, or after the date the provider receives the documents if the owner erroneously provides the documents directly to the provider, the provider shall pay or transfer the proceeds of the life settlement into an escrow or trust account that is maintained in a state or federally chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation and managed by an independent trustee or escrow agent. Upon payment of the life settlement proceeds into the escrow account, the independent escrow agent shall deliver the original change in ownership, assignment, or change in beneficiary form to the provider or related provider trust or other designated representative of the provider. Upon the escrow agent's receipt of acknowledgement of the properly completed transfer of ownership, assignment, or designation of beneficiary from the insurer, the independent escrow agent shall pay the life settlement proceeds to the owner.
Failure to tender the life settlement proceeds to the owner within the time set forth in the disclosure under sub. (8) (a) 1. g.
, renders 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. Funds are sent by a provider to an owner as of the date that the escrow agent either releases funds for wire transfer to the owner or places a check for delivery to the owner via the U.S. postal service or other nationally recognized delivery service.
For the purpose of determining the health status of the insured after the life settlement has occurred, only the provider or broker licensed in this state or a person it authorizes may contact the insured. Contact with the insured shall be limited to once every 3 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 or one year or less. The provider or broker shall explain the procedure for the contacts to the owner at the time the life settlement contract is entered into. The limitations in this paragraph do not apply to any contacts with an insured for reasons other than determining the insured's health status. Providers and brokers shall be responsible for the actions of a person they authorize to make the contact.
Prohibited contracts; required form; acknowledgement; fiduciary duty. 632.69(12)(a)
No person may enter into a life settlement contract at any time before the application or issuance of a policy that is the subject of a life settlement contract or within a 5-year period commencing with the date of issuance of the policy unless any of the following conditions have been met:
The owner certifies to the provider that, within the 5-year period, the policy was issued upon the owner's exercise of conversion rights arising out of a group or individual policy, provided the total of the time covered under the conversion policy plus the time covered under the prior policy is at least 60 months. The time covered under the group policy shall be calculated without regard to any change in insurance carriers, if the coverage has been continuous and under the same group sponsorship.
The owner submits independent evidence to the provider that any of the following conditions have been met within the 5-year period:
The owner becomes physically or mentally disabled and a physician determines that the disability prevents the owner from maintaining full-time employment.
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, 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.
The sole beneficiary of the policy is a family member of the owner and the beneficiary dies.
The owner is a charitable organization with an insurable interest that has received from the federal Internal Revenue Service a determination letter that is currently in effect stating that the charitable organization is described in section 501
(c) (3) of the Internal Revenue Code and is exempt from federal income taxation under section 501
(a) of the Internal Revenue Code.
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 policy was initially issued.
Other circumstances exist that are established as eligible exemptions by the commissioner by rule, including substantial adverse financial circumstances or other factors substantially affecting the owner.
The owner certifies to the provider that the owner is entering into a life settlement contract more than 2 years after the date of issuance of a policy and, with respect to the policy, at all times before the date that is 2 years after policy issuance all of the following conditions are met:
Policy premiums are funded exclusively with unencumbered assets, including an interest in the policy being financed only to the extent of its net cash surrender value, provided by, or full recourse liability incurred by, the owner or a person described in sub. (1) (j) 2. e.
There is no agreement or understanding with any other person to guarantee any liability or to purchase, or stand ready to purchase, the policy, including through an assumption or forgiveness of a loan.
Neither the insured nor the policy has been evaluated for settlement.
Copies of the independent evidence described in par. (a) 2.
and documents required by sub. (11) (a)
shall be submitted to the insurer when the provider entering into a life settlement contract with an owner submits a request to the insurer for verification of coverage. The provider shall submit, along with the copies, a letter of attestation from the provider that the copies are true and correct copies of the documents received by the provider.
If the provider submits to the insurer a copy of the owner's certification under par. (a) 1.
or independent evidence under par. (a) 2.
when the provider submits a request to the insurer to effect the transfer of the policy to the provider, the copy conclusively establishes that the life settlement contract satisfies the requirements of this subsection and the insurer shall timely respond to the request.
No insurer may, as a condition of responding to a request for verification of coverage or effecting the transfer of a policy pursuant to a life settlement contract, require that the owner, insured, provider, or broker sign any form, disclosure, consent, or waiver that has not been expressly approved by the commissioner for use in connection with life settlement contracts in this state.
Upon receipt of a properly completed request for change of ownership or beneficiary of a policy, the insurer shall respond in writing within 30 calendar days with acknowledgement confirming that the change has been effected or specifying the reasons why the requested change cannot be processed.
A broker represents only the owner and owes a fiduciary duty to the owner to act according to the owner's instructions and in the best interest of the owner, notwithstanding the manner in which the broker is compensated.
Prohibited practices and conflicts of interest. 632.69(13)(a)
No person may enter into a life settlement contract if the person knows or reasonably should have known that the policy that is the subject of the life settlement contract was obtained by means of a false, deceptive, or misleading application for the policy.
No person may engage in any transaction, practice, or course of business if the person knows or reasonably should know that the intent is to avoid the notice requirements of this section.
No person may engage in any fraudulent act or practice in connection with any transaction relating to any life settlement involving an owner.
No person may issue, solicit, market, or otherwise promote the purchase of a policy for the primary purpose of or with a primary emphasis on settling the policy.
No person may enter into a premium finance agreement with any person or agency, or any person affiliated with such person or agency, pursuant to which the person who is providing premium financing receives any proceeds, fees, or other consideration, directly or indirectly, from the policy or owner of the policy or any other person with respect to the premium finance agreement or any life settlement contract or other transaction related to the policy that is in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums pursuant to the premium finance agreement or subsequent sale of the agreement. Any payments, charges, fees, or other amounts in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums paid under the premium finance agreement shall be remitted to the original owner of the policy or to the owner's estate if the owner is not living at the time of the determination of the overpayment.