Sec. 3 AAC 31.395 - Prohibited practices
§ 3 AAC 31.395. Prohibited practices
(a) A viatical settlement provider may not also act as a viatical settlement broker, whether entitled to collect a fee directly or indirectly, in the same viatical settlement transaction.
(b) A person may not knowingly engage in a viatical settlement transaction in which the person has participated in the sale or solicitation of the associated life insurance policy.
(c) A viatical settlement broker may not seek or receive compensation from the viator, without obtaining the written agreement of the viator for the compensation before performing services in connection with a viatical settlement transaction.
(d) A person may not use a longer life expectancy than is realistic in order to reduce the payout to which the viator is entitled or use more than one life expectancy in a single viatical settlement transaction.
(e) A person may not knowingly enter into or effectuate a viatical settlement contract in which the associated life insurance policy was obtained by means of a false, deceptive, or misleading application.
(f) A person may not communicate, in any way, an advertisement, announcement, or statement containing an assertion, representation, or statement with respect to the viatical settlement business or with respect to a person in the conduct of the person's viatical settlement business that
(1) misrepresents the benefits, advantages, conditions, sponsorship, source, or terms of a viatical settlement contract;
(2) is a misrepresentation for the purpose of effecting or tending to effect a viatical settlement contract;
(3) uses a name or title of a viatical settlement contract that misrepresents its true nature;
(4) appears to be an actual viatical settlement contract for the named viator when it is merely an advertisement;
(5) does not clearly designate the name of the viatical settlement provider; or
(6) is in any way misleading, false, or deceptive.
(g) A person may not enter into a viatical settlement contract within two years after the date the life insurance policy to be viaticated is issued unless evidence is provided that one or more of the following conditions is met within the two-year period:
(1) the life insurance policy was issued upon the policy owner's exercise of conversion rights under a group or individual life insurance policy and the duration of coverage under the conversion policy plus the duration of coverage under the prior policy is at least 24 months;
(2) the policy owner is a charitable organization exempt from taxation under 26 U.S.C. 501(c)(3);
(3) the policy owner is not a natural person;
(4) the viator or the insured provides independent evidence to the viatical settlement provider that at least one of the following has occurred within the two-year period:
(A) the policy owner or insured is terminally or chronically ill;
(B) the viator's spouse dies;
(C) the viator becomes divorced;
(D) the viator retires from full-time employment;
(E) the viator becomes physically or mentally disabled and a physician certifies that the disability prevents the viator from maintaining full-time employment;
(F) the viator was the insured's employer at the time the life insurance policy was issued and the employment relationship has been terminated;
(G) on the application of a creditor of the viator, a court of competent jurisdiction enters a final order, judgment, or decree,
(i) adjudicating the viator bankrupt or insolvent;
(ii) approving a petition seeking reorganization of the viator; or
(iii) appointing a receiver, trustee, or liquidator to a substantial portion of the viator's assets;
(H) the viator experiences a significant decrease in income that is unexpected by the viator and that impairs the viator's reasonable ability to pay the premiums necessary to keep the life insurance policy in force;
(I) the viator or insured disposes of ownership in a closely held corporation under which the life insurance policy was purchased.
(h) A viatical settlement provider shall submit independent evidence to the insurance company that at least one of the conditions in (g) of this section was met when the viatical settlement provider submits a request to the insurance company to effectuate the transfer of a life insurance policy to the viatical settlement provider.(Eff. 8/25/2002, Register 163)
In 2010 the revisor of statutes, acting under AS 01.05.031, renumbered former AS 21.89.110 as AS 21.96.110. As of Register 196 (January 2011), the regulations attorney made a conforming technical revision under AS 44.62.125(b)(6), to the authority citation that follows 3 AAC 31.395, so that the citation to former AS 21.89.110 now refers to the renumbered statute, AS 21.96.110.
The following state regulations pages link to this page.