KRS 304.15-715: Requirements for life settlement contracts.

(1) A life settlement provider entering into a life settlement contract with any person

shall first obtain:

(a) If the owner is 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; and

(b) A document in which the insured consents to the release of his or her medical

records to a life settlement provider, life insurance agent, or life settlement

broker and, if the policy was issued les s than two (2) years from the date of

application for a life settlement contract, to the insurance company that issued

the policy.

(2) The insurer shall respond to a request for verification of coverage submitted by a

life settlement provider or life settl ement broker not later than thirty (30) calendar

days after the date the request is received. The request for verification of coverage

shall be made on a form approved by the commissioner. The insurer shall complete

and issue the verification of coverage o r indicate in which respects it is unable to

respond. In its response, the insurer shall indicate whether, based on the medical

evidence and documents provided, the insurer intends to pursue an investigation at

that time regarding the validity of the insurance contract or possible fraud, and shall

provide sufficient detail of all reasons for the investigation to the life settlement

provider or life settlement broker.

(3) Prior to or at the time of execution of the life settlement contract, the life settleme nt

provider shall obtain a witnessed document in which the owner consents to the life

settlement contract, represents that he or she has a full and complete understanding

of the life settlement contract and a full and complete understanding of the benefits

of the policy, and acknowledges that he or she has entered into the life settlement

contract freely and voluntarily and, for persons with a terminal or chronic illness or

condition, that the terminal or chronic illness or condition was diagnosed after the

policy was issued.

(4) All medical information solicited or obtained by any licensee shall be subject to the

applicable provision of state law relating to confidentiality of medical information.

(5) All life settlement contracts entered into in this state shall contain an unconditional

right to rescind a life settlement contract before the earlier of thirty (30) calendar

days after the date it is executed or fifteen (15) calendar days after the date of

receipt of the proceeds of the life settlement contrac t by the owner. If exercised by

the owner, rescission is effective only if both notice of the rescission is given, and

within the rescission period all proceeds, and any premiums, loans, and loan interest

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

period, the life settlement contract shall be deemed to have been rescinded subject

to repayment of all proceeds and any premiums, loans, and loan interest to the life

settlement provider. The life settlement provider sha ll effectuate the change of

ownership of the policy or certificate to the owner immediately upon effective

rescission by the owner.

(6) The independent third -party trustee shall transfer the proceeds that are due to the

owner within two (2) business days u pon receipt of acknowledgment of the transfer

of ownership from the insurer.

(7) Failure to tender consideration to the owner for the life settlement contract by the

date disclosed renders the life settlement contract voidable by the owner for lack of

consideration until the time consideration is tendered to and accepted by the owner.

(8) Contacts with the insured for the purpose of determining the health status of the

insured after the execution of the life settlement contract shall only be made by the

life settlement provider or its authorized representative and shall be limited to once

every three (3) months for an insured with a life expectancy of more than one (1)

year, and to no more than once per month for an insured with a life expectancy of

one (1) year or less. The life settlement provider shall explain the procedure for

these contacts at the time the life settlement contract is entered into. The limitations

set forth in this subsection shall not apply to any contacts with an insured for

reasons other than determining the insured's health status. Life settlement providers

shall be responsible for the actions of their authorized representatives.

(9) The insurer shall not unreasonably delay effecting change of ownership or

beneficiary with any life set tlement contract lawfully entered into in the

Commonwealth or with a resident of the Commonwealth.

(10) If a life settlement broker performs any activities required of the provider under this

section, the provider is deemed to have fulfilled those requirem ents of this section

that have been properly performed by the broker.

(11) If a life settlement broker performs any of the disclosure activities required of the

provider under KRS 304.15 -710, the provider is deemed to have fulfilled those

requirements of KRS 304.15-710 that have been properly performed by the broker.

(12) Within twenty (20) days after an owner executes the life settlement contract, the

provider shall give written notice to the insurer that issued that insurance policy that

the policy has be come subject to a life settlement contract. The notice shall be

accompanied by the documents required by KRS 304.15-702(1)(b).

(13) Any fee paid by a provider, party, individual, or an owner to a broker in exchange

for services provided to the owner pertaining to a life settlement contract shall be

computed as a percentage of the offer obtained, not the face value of the policy.

Nothing in this section shall be construed as prohibiting a broke r from reducing

such broker's fee below this percentage if the broker so chooses.

(14) The broker shall disclose to the owner anything of value paid or given to a broker

which relates to a life settlement contract.