N.Y. Insurance Law § 7811: Disclosures to owners and insureds

§ 7811. Disclosures to owners and insureds. (a) The life settlement

provider or life settlement broker shall provide the owner with a

separate written document conspicuously displaying the information and

disclosures required by this subsection. The separate document shall be

signed by the owner and life settlement provider, no later than the date

the life settlement contract is signed by all parties. At a minimum, the

document shall state:

(1) that there are possible alternatives to life settlement contracts,

including accelerated benefits offered by the issuer of the policy;

(2) that some or all of the proceeds of a life settlement contract may

be taxable and that advice should be sought from a professional tax

advisor;

(3) that the proceeds from a life settlement contract could be subject

to the claims of creditors;

(4) that receipt of proceeds from a life settlement contract may

adversely affect the recipients' eligibility for public assistance or

other government benefits or entitlements and that advice should be

obtained from the appropriate agencies;

(5) that the owner has a right to rescind a life settlement contract

from the time of execution of the contract until fifteen days after the

receipt of the life settlement proceeds by the owner;

(6) that proceeds will be sent to the owner within three business days

after the life settlement provider has received the insurer or group

administrator's acknowledgement that ownership of the policy or interest

in the certificate has been transferred and the beneficiary has been

designated in accordance with the terms of the life settlement contract;

(7) 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 or certificate of a group

policy to be forfeited by the owner and that assistance should be sought

from a professional financial advisor;

(8) the gross offer or bid that the life settlement provider shall pay

pursuant to the life settlement contract; the net amount to be paid to

the owner pursuant to the life settlement contract; the name of each

life settlement broker, life settlement intermediary, insurance producer

or insurance consultant that will be compensated by the life settlement

provider, or any affiliate, parent corporation, or subsidiary of the

life settlement provider; and the amount of compensation that the life

settlement provider, or any affiliate, parent corporation or subsidiary

of the life settlement provider, shall provide to a life settlement

broker, life settlement intermediary, insurance producer or insurance

consultant, or any affiliate, parent corporation or subsidiary of such

broker, intermediary, producer, or consultant, pursuant to the life

settlement contract. For the purposes of this paragraph, "gross offer or

bid" means the total amount or value offered by the life settlement

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

inclusive of commissions and fees;

(9) the date by which the funds will be available to the owner and the

transmitter of the funds;

(10) that the life settlement provider or life settlement broker is

required to provide an owner during the solicitation process with a

consumer information booklet in a form prescribed by the superintendent,

or other similar material, subject to the approval of the

superintendent;

(11) that the insured may be contacted by either the life settlement

provider or life settlement broker, or any authorized representative

thereof, for the purpose of determining the insured's health status or

to verify the insured's address, and that the contact shall be 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;

(12) any affiliations or contractual arrangements between the life

settlement provider and the issuer of the policy to be settled;

(13) any affiliations or contractual arrangements with any other life

settlement provider, life settlement broker, life settlement

intermediary or party financing the transaction;

(14) that a life settlement broker represents exclusively the owner,

and not the insurer or the life settlement 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 interest of the

owner;

(15) the name, business address, telephone number and e-mail address

of the independent, third party escrow agent and that the owner has the

right to inspect or receive copies of the relevant escrow or trust

agreements or documents;

(16) that a change of 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

life; and

(17) the name, business address, telephone number and e-mail address

of the life settlement provider.

(b) The life settlement provider or life settlement broker shall

provide to the insured in a separate written document conspicuously

displaying the information and disclosures required by this subsection.

The separate document shall be signed by the insured no later than the

date the life settlement contract is signed by all parties. The document

shall:

(1) state that the insured may be contacted by either the life

settlement provider or life settlement broker or any authorized

representative thereof, for the purpose of determining the insured's

health status or to verify the insured's address, and that the contact

shall be 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;

(2) state that a change of ownership could in the future limit the

insured's ability to purchase additional insurance on the insured's life

because there is a limit to how much coverage insurers will issue on one

life; and

(3) contain the following language, or such other language required by

the superintendent by regulation: "All medical, financial or personal

information solicited or obtained by a life 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 contract between

the owner and 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".

(c) The life settlement broker shall provide the owner with a separate

written document conspicuously displaying the information and

disclosures required by this subsection. The separate document shall be

signed by the owner and life settlement broker, no later than the date

the life settlement contract is signed by all parties. At a minimum, the

document shall state:

(1) the name, business address, telephone number and e-mail address of

the life settlement broker;

(2) a full, complete and accurate description of all the offers,

counter-offers, acceptances and rejections relating to the proposed life

settlement contract;

(3) any affiliations or contractual arrangements with any life

settlement provider, other life settlement broker, life settlement

intermediary or any financing entity;

(4) the gross amount to be paid pursuant to the life settlement

contract, the net amount of the proceeds to be paid to the owner

pursuant to the life settlement contract, the amount of compensation to

be paid to the life settlement broker pursuant to the life settlement

contract, and the name of such life settlement broker. For purposes of

this paragraph, "gross amount to be paid" means the total amount or

value to be paid by the life settlement provider for the purchase of one

or more life insurance policies, inclusive of commissions and fees; and

(5) a complete reconciliation of the gross offer or bid by the life

settlement provider to the net amount of proceeds or value to be

received by the owner, provided that for the purpose of this section,

"gross offer or bid" shall mean the total amount or value offered by the

life settlement provider for the purchase of one or more life insurance

policies, inclusive of commissions and fees.