{"data":{"id":"us-ky/krs-304.15-717","jurisdiction":"us-ky","citation":"KRS 304.15-717","heading":"Circumstances under which life settlement transactions are unlawful --","body":"Required statement regarding false information -- Furnishing information\nregarding fraudulent life settlement acts.\n(1) It is unlawful for any person:\n(a) To knowingly or intent ionally enter into a life settlement contract when the\nsubject life insurance policy was obtained by means of a false, deceptive, or\nmisleading application for the life insurance policy;\n(b) To knowingly or intentionally interfere with the enforcement of the provisions\nof this subtitle or investigations of suspected or actual violations of this\nsubtitle;\n(c) To knowingly or intentionally permit a person convicted of a felony involving\ndishonesty or breach of trust to participate in the business of life sett lements\nas defined in KRS 304.15-020(5);\n(d) To commit a fraudulent life settlement act;\n(e) To misrepresent that the life settlement provider, life settlement broker, other\nlicensee, or any other person has been guaranteed, sponsored, recommended,\nor approved by the state, or by any local, state, or federal agency or officer\nthereof;\n(f) To act as a life settlement broker if the person is acting as a life settlement\nprovider in the same life settlement contract;\n(g) For any person to pay any compensation o r provide anything of value to an\ninsured's physician, attorney, accountant, or any other person who provides\nmedical, legal, or financial advice to the insured as a finder's or referral fee;\n(h) To engage in any transaction, practice, or course of busines s if such person\nknows or reasonably should have known that the intent was to avoid the\nnotice requirements of KRS 304.15-020 and 304.15-700 to 304.15-720;\n(i) To engage in any fraudulent act or practice in connection with any transaction\nrelating to any settlement involving an owner who is a resident of this state;\n(j) To issue, solicit, market, or otherwise promote the purchase of a life insurance\npolicy for the sole purpose of or with a primary emphasis on settling the\npolicy;\n(k) To enter into a life se ttlement contact on a policy that was the subject of a\npremium finance agreement as described in KRS 304.15-020(17)(b)2.;\n(l) With respect to any life settlement contract or life insurance policy and a\nbroker, to knowingly solicit an offer from, effectuate  a life settlement contract\nwith or make a sale to any provider, financing entity, or related provider trust,\nor any insurer that is controlling, controlled by, or under common control with\nsuch broker unless disclosed to the owner;\n(m) With respect to any  life settlement contract or life insurance policy and a\nprovider, to knowingly enter into a life settlement contract with an owner if, in\nconnection with such life settlement contract, anything of value will be paid to\na broker or provider that is control ling, controlled by, or under common\ncontrol with such provider, the financing entity, or related provider trust that is\ninvolved in such life settlement, or any insurer unless disclosed to the owner;\n(n) With respect to a provider, to  enter into a life settlement contract unless the\nlife settlement promotional, advertising, and marketing materials, as may be\nprescribed by administrative regulation, have been filed with the\ncommissioner. Marketing materials shall not expressly reference  that the\ninsurance is \"free\" for any period of time. The inclusion of any reference in\nthe marketing materials that would cause an owner to reasonably believe that\nthe insurance is free for any period of time shall be considered a violation of\nKRS 304.15-700 to 304.15-720;\n(o) With respect to any insurance company, insurance producer, broker, or\nprovider, or any other person, to make any statement or representation to the\napplicant or policyholder in connection with the sale or financing of a life\ninsurance policy to the effect that the insurance is free or without cost to the\npolicyholder for any period of time unless provided in the policy; or\n(p) If an insurer, to:\n1. Engage in or permit any discrimination between individuals of the same\nclass, same poli cy amount, and equal expectation of life in the rates\ncharged for any life insurance policy or annuity contract based upon an\nindividual's having entered into a life settlement contract or being\ninsured under a settled policy;\n2. Make any false or misleadi ng statement as to the business of life\nsettlements or financing premiums due for a policy or to any owner or\ninsured for the purpose of inducing or tending to induce the owner or\ninsured not to enter into a life settlement contract; or\n3. Engage in any transaction, act, practice, or course of business, or dealing\nwhich restricts, limits, or impairs in any way the lawful transfer of\nownership, change of beneficiary, or assignment of a policy.\nThis subsection shall not prohibit a statement that the person i s licensed, if that\nstatement is true and the effect of the statement is not misrepresented.\n(2) A life settlement contract and an application for a life settlement contract, regardless\nof the form of transmission, shall contain the following statement or a substantially\nsimilar statement:\n\"Any person who knowingly presents false information in an application for\ninsurance or life settlement contract is guilty of a crime and upon conviction\nmay be subject to fines or confinement in prison, or both.\"\nThe lack of a statement required by this section does not constitute a defense in any\nprosecution for a fraudulent life settlement act.\n(3) (a) A person engaged in the business of life settlements who has knowledge or a\nreasonable belief that a fraudulent life settlement act is being, will be, or has\nbeen committed shall provide the information required to the commissioner,\nin a manner prescribed by the commissioner.\n(b) Any person who has knowledge or a reasonable belief that a fraudulent life\nsettlement act is  being, will be, or has been committed may provide the\ninformation required to the commissioner, in a manner prescribed by the\ncommissioner in administrative regulations.\n(4) (a) Civil liability may not be imposed on and a cause of action may not arise from\na person's furnishing information concerning suspected, anticipated, or\ncompleted fraudulent life settlement acts, or suspected or completed\nfraudulent insurance acts, if the information is provided to or received from:\n1. The commissioner or the commiss ioner's employees, agents, or\nrepresentatives;\n2. Federal, state, or local law enforcement or regulatory officials, or their\nemployees, agents, or representatives;\n3. A person involved in the prevention and detection of fraudulent life\nsettlement acts or that person's agents, employees, or representatives;\n4. The National Association of Insurance Commissioners (NAIC), the\nNational Association of Securities Dealers (NASD), the North American\nSecurities Administrators Association (NASAA), or their employees,\nagents, or representatives, or any other regulatory body overseeing life\ninsurance or life settlement contracts;\n5. The insurer that issued the policy covering the life of the insured; or\n6. The licensee and any agents, employees, or representatives.\n(b) This subsection shall not apply to a statement made with actual malice. In an\naction brought against a person for filing a report or furnishing other\ninformation concerning a fraudulent life settlement act or a fraudulent\ninsurance act, the party bringing t he action shall plead specifically any\nallegation that this subsection shall not apply because the person filing the\nreport or furnishing the information did so with actual malice.\n(c) A person who furnishes information concerning fraudulent life settlemen t acts\nand who is a party in a civil cause of action for libel, slander, or another\nrelevant tort arising out of activities in carrying out the provisions of this\nchapter shall be entitled to an award of attorney's fees and court costs if he is\nthe prevail ing party in the suit and the party bringing the action was not\nsubstantially justified in filing the cause of action. For purposes of this\nparagraph, a proceeding is \"substantially justified\" if a person had a\nreasonable basis in law or fact at the time the cause of action was initiated.\n(d) This subsection shall not abrogate or modify common law or statutory\nprivileges or immunities enjoyed by a person.\n(e) This subsection shall not apply to a person who furnishes information\nconcerning his own suspected,  anticipated, or completed fraudulent life\nsettlement acts or suspected, anticipated, or completed fraudulent insurance\nacts.\n(5) The documents and evidence provided pursuant to subsection (4) of this section or\nobtained by the commissioner in an investiga tion of suspected or actual fraudulent\nlife settlement acts shall be privileged and confidential and shall not be a public\nrecord and shall not be subject to discovery or subpoena in a civil or criminal\naction, except that:\n(a) This subsection shall not pr ohibit release by the commissioner of documents\nand evidence obtained in an investigation of suspected or actual fraudulent life\nsettlement acts:\n1. In administrative or judicial proceedings to enforce laws administered by\nthe commissioner;\n2. To federal, state, or local law enforcement or regulatory agencies, to an\norganization established for the purpose of detecting and preventing\nfraudulent life settlement acts, or to the National Association of\nInsurance Commissioners (NAIC); or\n3. At the discretion of the commissioner, to a person in the business of life\nsettlements that is aggrieved by a fraudulent life settlement act; and\n(b) The release of documents and evidence provided by paragraph (a) of this\nsubsection shall not abrogate or modify th e privilege granted by this\nsubsection.\n(6) This section shall not:\n(a) Preempt the authority or relieve the duty of other law enforcement or\nregulatory agencies to investigate, examine, and prosecute suspected\nviolations of law;\n(b) Prevent or prohibit a person from voluntarily disclosing information\nconcerning fraudulent life settlement acts to a law enforcement or regulatory\nagency other than the Department of Insurance;\n(c) Limit the powers granted elsewhere by the laws of this state to the\ncommissioner or an insurance fraud unit to investigate and examine possible\nviolations of law and to take appropriate action against wrongdoers; or\n(d) Preempt, supersede, or limit any provision of any state securities law or any\nrule, order, administrative regulation, or notice issued thereunder.\n(7) A life settlement provider shall adopt antifraud initiatives reasonably calculated to\ndetect, prosecute, and prevent fraudulent life settlement acts. The commissioner\nmay order or, if a licensee requests, may grant modifi cations of the required\ninitiatives listed in this subsection as necessary to ensure an effective antifraud\nprogram. The modifications may be more or less restrictive than the required\ninitiatives so long as the modifications reasonably may be expected to accomplish\nthe purpose of this section. Antifraud initiatives shall include the following:\n(a) Fraud investigators, who may be life settlement providers or employees or\nindependent contractors of those life settlement providers; and\n(b) An antifraud plan t hat shall be filed with the commissioner and that shall\ninclude but is not limited to the following:\n1. The procedures for detecting and investigating possible fraudulent life\nsettlement acts and procedures for resolving material inconsistencies\nbetween medical records and insurance applications;\n2. The procedures for reporting possible fraudulent life settlement acts to\nthe commissioner;\n3. The plan for antifraud education and training of underwriters and other\npersonnel; and\n4. A chart outlining the organ izational arrangement of the antifraud\npersonnel who are responsible for the investigation and reporting of\npossible fraudulent life settlement acts and investigating unresolved\nmaterial inconsistencies between medical records and insurance\napplications.\nAntifraud plans filed with the commissioner shall be privileged and\nconfidential and shall not be a public record and shall not be subject to\ndiscovery or subpoena in a civil or criminal action.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17256","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:44Z","sha256":"d526746f46ad4f8b075b6073cf21315fc5ddb95977369bf1c0b6041812a6f2c7","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.15-716","next":"us-ky/krs-304.15-718"},"notice":"GroundRules: Original legal text. Not legal advice."}