Disclosure by life settlement provider, broker or investment agent to policy owner
(1) With an application for a life settlement, a life settlement provider or life settlement broker shall provide the owner with at least the following disclosures no later than the time the application for the life settlement contract is signed by all parties. The disclosures must be provided in a separate document that is signed by the owner and the life settlement provider or life settlement broker, and must provide the following information:
(a) There are possible alternatives to life settlement contracts, including any accelerated death benefits or policy loans offered under the owner’s life insurance policy.
(b) A life settlement broker represents exclusively the owner, and not the insurer or the life settlement provider, 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.
(c) Some or all of the proceeds of the life settlement may be taxable under federal and state income tax, and assistance should be sought from a professional tax adviser.
(d) Proceeds of the life settlement may be subject to the claims of creditors.
(e) Receipt of proceeds from a life settlement contract may affect the owner’s eligibility for public assistance or other government benefits or entitlements, and advice should be obtained from appropriate agencies. Receipt of proceeds from a life settlement contract may reduce the owner’s risk of becoming impoverished and becoming dependent on public assistance or other government benefits or entitlements.
(f) The owner has the right to rescind a life settlement contract before the earlier of 60 calendar days after the date upon which the life settlement contract is executed by all parties or 30 calendar days after the life settlement proceeds have been paid to the owner, as provided in ORS 744.364 (Life settlement contract requirements) (3). Rescission, if exercised by the owner, is effective only if both notice of the rescission is given, and the owner repays all proceeds and any premiums, loans and loan interest paid on account of the life settlement within the rescission period. If the insured dies during the rescission period, the life settlement contract shall be deemed to have been rescinded, subject to repayment by the owner or the owner’s estate of all life settlement proceeds and any premiums, loans and loan interest of the life settlement within 60 days of the insured’s death.
(g) Funds will be sent to the owner within three business days after the life settlement provider has received the insurer or group administrator’s written acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated.
(h) Entering into a life settlement contract may prevent the owner from qualifying for new life insurance coverage in the future and may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate, to be forfeited by the owner. Assistance should be sought from a financial adviser.
(i) The following language: “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 between the owner and the life settlement 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.”
(j) Following execution of a life contract, the insured may be contacted for the purpose of determining the insured’s health status and to confirm the insured’s residential or business street address and telephone number, or as otherwise provided in ORS 744.318 (Definitions for ORS 744.318 to 744.384) to 744.384 (Rules), 744.991 (Criminal penalties) and 744.992 (Civil penalties). This contact is limited to once every three months if the insured has a life expectancy of more than one year, and to no more than once per month if the insured has a life expectancy of one year or less. All such contacts shall be made only by a life settlement provider licensed in the state in which the owner resided at the time of the life settlement, or by the authorized representative of a duly licensed life settlement provider.
(2) Prior to or concurrently with the disclosures required under subsection (1) of this section, the owner shall be given a brochure describing the process of life settlements. The Director of the Department of Consumer and Business Services shall develop and approve a form for the brochure.
(3) A life settlement provider shall provide the owner with at least the following disclosures no later than the date the life settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the life settlement contract or in a separate document signed by the owner and provide the following information:
(a) The affiliation, if any, between the life settlement provider and the issuer of the insurance policy to be settled;
(b) The name, business address and telephone number of the life settlement provider;
(c) Any affiliations or contractual arrangements between the life settlement provider and the life settlement purchaser;
(d) If an insurance policy to be settled has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be settled, information about the possible loss of coverage on the other lives under the policy and the need to consult with the owner’s insurance producer or the insurer issuing the policy for advice on the proposed life settlement;
(e) The dollar amount of the current death benefit payable to the life settlement provider under the policy or certificate. If known, disclosure of the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy or certificate and the extent to which the owner’s interest in those benefits will be transferred as a result of the life settlement contract;
(f) If the funds will be escrowed with an independent third party during the transfer process, the name, business address and telephone number of the independent third party escrow agent, and the fact that the owner may inspect or receive copies of the relevant escrow or trust agreements or documents;
(g) The name, business address and telephone number of the life settlement broker;
(h) A full, complete and accurate description of all offers, counter-offers, acceptances and rejections relating to the proposed life settlement contract;
(i) A written disclosure of any affiliations or contractual arrangements between the life settlement broker and any person making an offer in connection with the proposed life settlement contracts;
(j) The amount and method of calculating the broker’s compensation. Compensation includes anything of value paid or given to a life settlement broker for the placement of a policy; and
(k) When any portion of the life settlement broker’s compensation, as described in paragraph (j) of this subsection, is taken from a proposed life settlement offer, disclosure of the total amount of the life settlement offer and the percentage of the life settlement offer comprised by the life settlement broker’s compensation.
(4) If the life settlement provider transfers ownership or changes the beneficiary of the insurance policy, the provider shall communicate in writing the change in ownership or beneficiary to the insured within 20 days after the change.
(5) A life settlement provider or its life settlement investment agent shall provide the life settlement purchaser with at least the following disclosures prior to the date the life settlement purchase agreement is signed by all parties. The disclosures must be conspicuously displayed in any life purchase contract or in a separate document signed by the life settlement purchaser and life settlement provider or life settlement investment agent, and must make the following disclosures to the life settlement purchaser:
(a) The purchaser shall receive no returns, such as dividends and interest, until the insured dies and a death claim payment is made.
(b) The actual annual rate of return on a life settlement contract is dependent upon an accurate projection of the insured’s life expectancy and the actual date of the insured’s death. An annual guaranteed rate of return is not determinable.
(c) The settled life insurance contract should not be considered a liquid purchase since it is impossible to predict the exact timing of its maturity and the funds probably are not available until the death of the insured. There is no established secondary market for resale of these products by the purchaser.
(d) The purchaser may lose all benefits or may receive substantially reduced benefits if the insurer goes out of business during the term of the life investment.
(e) The purchaser is responsible for payment of the insurance premium or other costs related to the policy, if required by the terms of the life purchase agreement. These payments may reduce the purchaser’s return. If a party other than the purchaser is responsible for the payment, the name and address of that party also shall be disclosed.
(f)(A) The purchaser is responsible for payment of the insurance premiums or other costs related to the policy.
(B) The amount of the premiums, if applicable.
(g) The name, business address and telephone number of the independent third party providing escrow services and the relationship to the broker.
(h) The amount of any trust fees or other expenses to be charged to the life settlement purchaser.
(i) Whether the purchaser is entitled to a refund of all or part of the purchaser’s investment under the settlement contract if the policy is later determined to be null and void.
(j)(A) Group policies may contain limitations or caps in the conversion rights, and additional premiums may have to be paid if the policy is converted.
(B) The name of the party responsible for the payment of the additional premiums.
(C) If a group policy is terminated and replaced by another group policy, there may be no right to convert the original coverage.
(k) The risks associated with policy contestability, including but not limited to the risk that the purchaser will have no claim or only a partial claim to death benefits should the insurer rescind the policy within the contestability period.
(L) Whether the purchaser will be the owner of the policy in addition to being the beneficiary and if the purchaser is the beneficiary only and not also the owner, the special risks associated with that status, including but not limited to the risk that the beneficiary may be changed or the premium may not be paid.
(m) The experience and qualifications of the person who determines the life expectancy of the insured, the information this projection is based on and the relationship of the projection maker to the life settlement provider, if any.
(6) Disclosure to a life settlement purchaser shall include distribution of a brochure describing the process of investment in life settlements, in a form to be developed and approved by the director.
(7) A life settlement provider or its life settlement investment agent shall provide the life settlement purchaser with at least the following disclosures no later than at the time of the assignment, transfer or sale of all or a portion of an insurance policy. The disclosures must be contained in a document signed by the life settlement purchaser and life settlement provider or life settlement investment agent, and must make the following disclosures to the life settlement purchaser:
(a) The life expectancy certifications obtained by the provider in the process of determining the price paid to the owner.
(b) If premium payments or other costs related to the policy have been escrowed, the date when the escrowed funds will be depleted, whether the purchaser is responsible for payment of premiums thereafter and, if so, the amount of the premiums.
(c) Whether or not premium payments or other costs related to the policy have been waived. If waived, whether or not the investor is responsible for payment of the premiums if the insurer that wrote the policy terminates the waiver after purchase, and the amount of those premiums.
(d) The type of policy offered or sold, such as whole life, term life, universal life or a group policy certificate, any additional benefits contained in the policy and the current status of the policy.
(e) If the policy is term insurance, the special risks associated with term insurance, including but not limited to the purchaser’s responsibility for additional premiums if the owner continues the term policy at the end of the current term.
(f) If the policy is contestable.
(g) If the insurer that wrote the policy has any additional rights that could negatively affect or extinguish the purchaser’s rights under the life settlement contract, what these rights are and under what conditions these rights are activated.
(h) The name and address of the person responsible for monitoring the insured’s condition. A description of how often the monitoring of the insured’s condition is done, how the date of death is determined and how and when this information is transmitted to the purchaser.
(8) The life settlement purchase agreement is voidable by the purchaser at any time within three days after the disclosures mandated by subsection (7) of this section are received by the purchaser. [2009 c.711 §11]
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.