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Regulations of Connecticut State Agencies (Last Updated: June 14,2023) |
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Title38a Insurance Department |
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SubTitle38a-465-1_38a-465-10. Viatical Settlements |
| Sec. 38a-465-1. Definitions [Repealed] |
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Repealed June 27, 2013. |
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(Adopted effective November 9, 1998; Amended March 1, 2000; Repealed June 27, 2013) |
| Sec. 38a-465-2. Annual statement reporting requirements |
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Each provider shall file with the Commissioner on or before March 1 each year, an annual statement containing the following information regarding business transacted in this state for the previous calendar year: (1) For each policy settled, the date that the life settlement contract was entered into; the life expectancy of the insured at the time of the contract; the face amount of the policy; the amount paid by the provider to settle the policy and the percentage that amount represents of the face amount; and if the insured has died, the date, the total insurance premiums paid by the provider to maintain the policy in force and the primary ICD diagnosis code, in numeric format, as defined by the International Classification of Diseases, as published by the U.S. Department of Health and Human Services; (2) a breakdown of applications received, accepted, and rejected, by disease category; (3) a breakdown of purchased policies by issuer, year of policy issuance and policy type; (4) the number of secondary market versus primary market transactions; (5) the total number of policies settled, the total policy premiums paid, the total paid to all owners, and the total commissions paid to brokers; (6) the source and amount of outside borrowing or financing; and (7) the name and address of each broker through whom the reporting company purchased a policy from an owner who resided in Connecticut at the time of contract. |
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(Adopted effective November 9, 1998; Amended March 1, 2000; Amended June 27, 2013) |
| Sec. 38a-465-3. Verification of license status of providers |
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Each licensed broker shall file on or before March 1 of each year, a notarized statement, signed under oath or affirmation, verifying that each provider from which such broker receives a commission or other payment or benefit is licensed in the State of Connecticut. |
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(Adopted effective November 9, 1998; Amended March 1, 2000; Amended June 27, 2013) |
| Sec. 38a-465-4. Confidentiality of identity of insured's information |
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Except as otherwise permitted under Section 38a-465d of the Connecticut General Statutes: (a) No person may submit the report required by Section 38a-465-2 in such a manner as would identify any insured except with the express written consent of such insured or the insured's estate or representative; (b) A life insurance producer, broker or provider shall not provide patient identifying information to any person, unless the owner and the insured provide written consent to the release of the information at or before the time of the settlement transaction. |
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(Adopted effective November 9, 1998; Amended March 1, 2000; Amended June 27, 2013) |
| Sec. 38a-465-5. Evaluation standards for reasonable payments |
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(a) A broker or provider shall not enter into a life settlement contract that provides payment to the owner that is unreasonable, unjust or inequitable. In determining whether a payment is unreasonable, unjust or inequitable, the Commissioner may consider, among other factors, the life expectancy of the insured, the applicable rating of the insurance company that issued the subject policy by a rating service generally recognized by the insurance industry, regulators and consumer groups and the prevailing discount rates in the life settlement contract market in Connecticut, or if sufficient data is unavailable for Connecticut, the prevailing discount rates nationally or in other states that maintain this data; and (b) A provider shall not use a longer life expectancy than is realistic in order to reduce the payout to which the owner is entitled. |
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(Adopted effective March 1, 2000; Amended June 27, 2013) |
| Sec. 38a-465-6. Amounts payable to owner |
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(a) Payment of the proceeds of a life settlement contract shall be made by means of wire transfer to the account of the owner or by certified check or cashier’s check. (b) Payment of the proceeds to the owner pursuant to a life settlement contract shall be made in a lump sum except where the provider has purchased an annuity or similar financial instrument issued by a licensed insurance company or bank, or an affiliate of either. Retention of a portion of the proceeds by the provider or escrow agents is not permissible. |
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(Adopted effective March 1, 2000; Amended June 27, 2013) |
| Sec. 38a-465-7. Prohibited practices |
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(a) A life insurance producer, broker or provider shall not discriminate in the creation or solicitation of a life settlement contract on the basis of race, color, age, sex, national origin, ancestry, creed, religion, occupation, marital or family status, sexual orientation, gender identity or expression, or based on whether the insured has children. (b) A life insurance producer, broker or provider shall not pay or offer to pay any finder’s fee commission or other compensation to any: (1) insured's physician, attorney, accountant, or any other person providing financial planning services, legal services or medical services to the insured, or to any other person acting as an agent of the insured with respect to the life settlement contract transaction; and (2) owner's attorney, accountant or any other person providing financial planning services or legal services to the owner, or to any other person acting as an agent of the owner with respect to the life settlement contract transaction. (c) A provider shall not knowingly solicit investors who have treated or have been asked to treat the illness of the insured whose coverage would be the subject of the investment. (d) A provider shall not act also as a broker, whether entitled to collect a fee directly or indirectly, in the same life settlement contract transaction. (e) A broker shall not, without the written agreement of the owner obtained prior to performing any services in connection with a life settlement contract, seek or obtain any compensation from the owner. (f) As used in this section, "gender identity or expression" has the same meaning as provided in section 1-1n of the Connecticut General Statutes. |
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(Adopted effective March 1, 2000; Amended June 27, 2013) |
| Sec. 38a-465-8. Advertising practices |
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(a) Advertising related to the life settlement contract shall be truthful and not misleading by fact or implication. (b) If the advertiser references the speed with which the settlement will occur, the advertising shall disclose the average time frame from completed application to the date of offer and from acceptance of the offer to receipt of the funds by the owner. (c) If the advertising references the dollar amounts available to owners, the advertising shall disclose the average purchase price as a percentage of face value obtained by owners contracting with the advertiser during the past six (6) months. |
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(Adopted effective March 1, 2000; Amended June 27, 2013) |
| Sec. 38a-465-9. Interest retained by owner |
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(a) If a provider enters a life settlement contract that allows the owner to retain an interest in the policy, the life settlement contract shall contain the following provisions: (1) A provision that the provider will effect the transfer of the amount of the death benefit only to the extent or portion of the amount settled. Benefits in excess of the amount settled shall be paid directly to the owner or the owner's beneficiary by the insurance company; (2) a provision that the provider will, upon acknowledgment of the perfection of the transfer, either (A) advise the insured, in writing that the insurance company has confirmed the owner's interest in the policy or (B) send a copy of the instrument sent from the insurance company to the provider that acknowledges the owner's interest in the policy; and (3) a provision that apportions the premiums to be paid by the provider and the owner. It is permissible for the life settlement contract to specify that all premiums shall be paid by the provider. The contract may also require that the owner reimburse the provider for the premiums attributable to the retained interest. (b) If a provider enters a life settlement contract that pertains to a contract with benefits that are in addition to the basic face amount of the life insurance, including but not limited to, benefits such as accidental death or double indemnity, the owner shall retain an interest in the policy to the extent of such rights. The owner may sell these additional rights to the provider if the life insurance policy does not prohibit the sale of such rights and the life settlement contract discloses or acknowledges the purchase of such rights. |
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(Adopted effective March 1, 2000; Amended June 27, 2013) |
| Sec. 38a-465-10. Disclosure requirements |
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A disclosure document containing the disclosures required in section 38a-465f of the Connecticut General Statutes and sections 38a-465-2 to 38a-465-10, inclusive, of the Regulations of Connecticut State Agencies shall be provided before or concurrent with taking an application for a life settlement contract. |
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(Adopted effective March 1, 2000; Amended June 27, 2013) |