Utah Admin. Code R590-222-8 - Disclosures

(1) The disclosure required by Subsection 31A-36-108(1), provided in a separate document no later than the time of the application for the life settlement and signed by the owner and the life settlement provider or life settlement producer, shall contain:

(a) the alternatives to a life settlement, including any accelerated death benefit, loan, or other benefit offered under the owner's life insurance policy;

(b) the proceeds of the life settlement may be taxable under federal and state income tax laws, and assistance should be sought from a professional tax advisor;

(c) proceeds of the life settlement may be subject to the claims of creditors;

(d) receipt of the proceeds of a life settlement may adversely affect the owner's eligibility for Medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate government agencies;

(e) the owner of the life settlement may rescind a life settlement within 15 calendar days after receipt of the life settlement proceeds under Subsection 31A-36-109(7);

(f) if the insured dies during the rescission period, the life settlement is rescinded;

(g) rescission is subject to repayment of all life settlement proceeds, any premiums, loans, and loan interest to the life settlement provider;

(h) funds are sent to the owner of the life settlement within three business days after the life settlement provider receives the insurer or group administrator's written acknowledgment that ownership of the policy or interest in the certificate is transferred and the beneficiary is designated;

(i) entering into a life settlement may cause other rights or benefits, including conversion rights and waiver of premium benefits that exist under the policy or certificate, to be forfeited by the owner and assistance should be sought from a financial adviser;

(j) the disclosure to an owner of a life settlement shall include Appendix C;

(k) the following language: "All medical, financial or personal information solicited or obtained by a life settlement provider or life settlement producer about an insured, including the insured's identity or the identity of family members, a spouse or a significant other may be disclosed as necessary to effect the life settlement between the owner and the life settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two years."; and

(l) the insured, following execution of a life settlement, may be contacted to determine the insured's health status and to confirm the insured's street address and telephone number;

(i) contact is limited to once every three months if the insured has a life expectancy of more than one year, and no more than once per month if the insured has a life expectancy of one year or less; and

(ii) contacts may be made by a life settlement provider licensed in the state in which the owner resided at the time of the life settlement, or by the authorized representative of a licensed life settlement provider.

(2)

(a) A life settlement provider shall provide the owner of the life settlement with a disclosure no later than the date the life settlement is signed by the parties.

(b) The disclosure shall be conspicuously displayed in the life settlement or in a separate document, signed by the owner, and provide:

(i) any affiliation between the life settlement provider and the issuer of the settled insurance policy;

(ii) the name, business address, and telephone number of the life settlement provider;

(iii)

(A) the amount and method used to calculate the compensation paid or to be paid to the life settlement producer or other person acting for the owner of the life settlement, in connection with the transaction;

(B) "compensation" includes anything of value paid or given for the placement of a policy;

(iv) if an insurance policy to be settled is issued as a joint policy or involves family riders or coverage of a life other than the insured under the policy to be settled, the owner shall be informed of the possible loss of coverage on the other lives under the policy and should consult an insurance producer or the insurer issuing the policy for advice on the proposed life settlement;

(v) state the dollar amount of the current death benefit payable to the life settlement provider under the policy or certificate, if known, the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy or certificate, and the extent to which the owner's interest in those benefits will be transferred because of the life settlement;

(vi) the name, business address, and telephone number of the independent third-party escrow agent; and

(vii) that the owner may inspect or receive copies of the relevant escrow or trust agreements or documents.

(3) If a life settlement provider transfers ownership or changes the beneficiary of the insurance policy, the provider shall communicate, in writing, the change in ownership or beneficiary to the insured within 20 days after the change.

Notes

Utah Admin. Code R590-222-8

Amended by Utah State Bulletin Number 2023-15, effective 7/25/2023