KRS 304.15-710: Life settlement provider's duties of disclosure to owner.

(1) With each application for a life settlement contract, a life settlement provider or life

settlement broker shall provide the owner a copy of the department's consumer

guide relating to life settlements. The provider shall provide in writing, in a separate

document that is signed by the owner and provider the information in this

subsection to the owner no later than the date the life settlement contract is signed

by all parties. The written disclosures shall be conspicuously displayed in any life

settlement contract or in a separate document furnished to the owner by a provider

including any affiliations or contractual arrangements between the provider and the

broker and shall provide the following information:

(a) That there are possible alternatives to life settlement contracts including but

not limited to accelerated benefits or policy loans offered under the owner's

policy;

(b) That some or all of the proceeds of the life settlement may be taxable under

federal income tax laws and state franchise and incom e tax laws, and that

assistance should be sought from a personal tax advisor;

(c) That proceeds of the life settlement contract could be subject to the claims of

creditors;

(d) That receipt of the proceeds of a life settlement contract may adversely affect

the owner's eligibility for Medicaid or other government benefits or

entitlements, and that advice should be obtained from the appropriate

government agencies;

(e) That the owner has a right to rescind a life settlement contract before the

earlier of thir ty (30) calendar days of the date it is executed by all parties or

fifteen (15) calendar days after the receipt of the proceeds of the life

settlement contract by the owner. If exercised by the owner, rescission is

effective only if both notice of the resc ission is given, and within the

rescission period all proceeds, and any premiums, loans, and loan interest are

repaid to the settlement provider. If the insured dies during the rescission

period, the settlement contract shall be deemed to have been rescind ed,

subject to repayment of all life settlement proceeds and any premiums, loans,

and loan interest to the life settlement provider. The life settlement provider

shall effectuate the change of ownership of the policy or certificate to the

owner immediately upon effective rescission by the owner;

(f) That entering into a life settlement contract may cause other rights or benefits,

including conversion rights and waiver of premium benefits that may exist

under the policy, to be forfeited by the owner and that assistance should be

sought from a financial adviser;

(g) That funds will be sent to the owner within three (3) business days after the

life settlement provider has received the insurer's or group administrator's

acknowledgment that ownership of the polic y has been transferred and the

beneficiary has been designated pursuant to the life settlement contract;

(h) That the disclosure document shall contain the following language:

"All medical, financial, or personal information solicited or obtained by a lif e

settlement provider or life settlement broker 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 lif e 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 permissio n to share information

every two (2) years."; and

(i) That the insured may be contacted by the life settlement provider or its

authorized representative for the purpose of determining the insured's health

status or to verify the insured's address. This con tact shall be limited to once

every three (3) months if the insured has a life expectancy of more than one

(1) year, and no more than once per month if the insured has a life expectancy

of one (1) year or less.

(2) A life settlement provider shall provide the owner with at least the following

disclosures no later than the date the life settlement contract is signed by all parties.

The disclosures shall be conspicuously displayed in the life settlement contract or in

a separate document signed by the owner a nd the life settlement provider and

provide the following information:

(a) State the affiliation, if any, between the life settlement provider and the issuer

of the policy to be acquired pursuant to a settlement contract;

(b) State the name, address and telephone number of the life settlement provider;

(c) If a policy to be acquired pursuant to a life settlement contract has been issued

as a joint policy or involves family riders or any coverage of a life other than

the insured under the policy to be acquired pursuant to a settlement contract,

the owner shall be informed of the possible loss of coverage on the other lives

and shall be advised to consult with his insurance producer or the company

issuing the policy for advice on the proposed life settlement contract;

(d) State the dollar amount of the current death benefit payable to the life

settlement provider under the policy. The life settlement provider shall, if

known, also disclose the availability of any additional guaranteed insurance

benefits, the dollar amount of any accidental death and dismembermen t

benefits under the policy, and the life settlement provider's interest in those

benefits;

(e) State the name, business address, and telephone number of the independent

third party escrow agent, and the fact that the owner may inspect or receive

copies of the relevant escrow or trust agreements or documents;

(f) The date by which the funds will be available to the owner and the transmitter

of the funds;

(g) That a consumer guide shall be delivered to owners with each application as

required in this subsection;

(h) That applications and life settlement contracts shall contain the statement as

required in KRS 304.15-717(2);

(i) That a broker represents exclusively the owner, and not the insurer or the

provider or any other person, and owes a fiduciary duty to the owner,

including a duty to act according to the owner's instructions and in the best

interests of the owner; and

(j) The fact that a change in ownership could in the future limit the insured's

ability to purchase future insurance on the insured's life because there is a

limit to how much coverage insurers will issue on one (1) life.

(3) If the life settlement provider transfers ownership or changes the beneficiary of the

policy, the life settlement provider shall communicate the change in ownership or

beneficiary to the insured within twenty (20) days after the change.

(4) A broker shall provide the owner and the provider with at least the following

disclosures no later than the date the life settlement contract is signed by all parties.

The disclosures shall be conspicuously displayed in the life settlement contract or in

a separate document signed by the owner and provide the following information:

(a) The name, business address, and telephone number of the broker;

(b) A full, complete, and accurate de scription of all the offers, counter -offers,

acceptances, and rejections relating to the proposed life settlement contract;

(c) The name of each broker who receives compensation and the amount of

compensation received by the broker, which compensation incl udes anything

of value paid or given to the broker in connection with the life settlement

contract;

(d) A complete reconciliation of the gross offer or bid by the provider to the net

amount of proceeds or value to be received by the owner. For the purposes of

this paragraph, "gross offer or bid" means the total amount or value offered by

the provider for the purchase of one (1) or more life insurance policies,

inclusive of the commissions and fees; and

(e) The failure to provide the disclosures or rights de scribed in this section shall

be deemed an unfair trade practice.