| SB 0031 | Regulates Viatical Settlements (Receipt of Life Insurance Proceeds Before Death) |
| Sponsor: | Flotron | |||
| LR Number: | S0152.02I | Fiscal Note: | 0152-02 | |
| Committee: | Commerce and Environment | |||
| Last Action: | 02/11/97 - SCS Voted Do Pass S Commerce & Environment Committee | Journal page: | ||
| Title: | ||||
| Effective Date: | January 1, 1998 | |||
SCS/SB 31 - This act regulates "viatical settlements", which are the sale of life insurance policies by people who have life- threatening illnesses.
LICENSES - The Department of Insurance shall license persons and businesses who buy life insurance policies from people who have a catastrophic or life-threatening illness or condition. License fees are $100 per year. Licenses may be refused if any officer or employee of the applicant does not meet the standards set (competent, trustworthy, good business reputation, experience or education). The Director of the Department of Insurance may suspend, revoke or refuse to renew licenses for listed reasons, provided a hearing is first conducted.
CONTRACT APPROVAL - No viatical settlement provider may use a contract unless it is first filed with and approved by the Director. Contracts shall be disapproved if provisions are unreasonable, contrary to the interests of the public, or otherwise misleading or unfair.
ANNUAL STATEMENTS - Licensees must file annual statements by March 1.
EXAMINATIONS - The Director may examine any licensee or applicant. Expenses shall be paid by the licensee or applicant. Data collected shall be confidential. Records of all viatical settlement transactions shall be maintained.
DISCLOSURES - The viatical settlement provider shall disclose certain information to the viator (life insurance policy owner), including possible alternatives, tax consequences, and the right to rescind within 30 days.
PROCEDURES - The provider buying the life insurance policy must obtain a physician's statement and the knowledgeable consent of the policy owner. Medical records must be released and kept confidential. A refund provision shall be included in the contract. Settlement proceeds shall be handled by an escrow agent.
PENALTIES - Violations shall be considered unfair trade practices and punished accordingly.
INCOME - Proceeds received shall not be considered gross income for tax purposes.
SECURITIES - Sale of one or more viatical settlements shall be regulated as a security, with an exemption for the sale of a single viatical settlement.
EFFECTIVE DATE - January 1, 1998.
Similar provisions were TAT in CCS/SS/SCS/HB 259.
JOAN GUMMELS