40-5009a. Same; viatical settlement contract; required documents; confidentiality of medical information; viator's rights rescind; payment of proceeds; contacts with viator; limitations.
40-5009a
40-5009a. Same; viatical settlement contract;required documents; confidentiality of medical information; viator's rightsrescind; payment of proceeds; contacts with viator; limitations.(a) (1) A viatical settlement provider entering into aviatical settlement contract shall first obtain:
(A) If the viator is the insured, a written statement from a licensedattending physician that the viator is of sound mind and under no constraint orundue influence to enter into a viatical settlement contract; and
(B) a document in which the insured consents to the release of such insured'smedical records to a viatical settlement provider, viatical settlement brokerand the insurance company that issued the life insurance policy covering thelife of the insured.
(2) Within 20 days after a viator executes documents necessary to transferany rights under an insurance policy or within 20 days of entering anyagreement, option, promise or any other form of understanding, expressed orimplied, to viaticate the policy, the viatical settlement provider shall givewritten notice to the insurer that issued that insurance policy that the policyhas or will become a viaticated policy. The notice shall be accompanied by thedocuments required by paragraph (3).
(3) The viatical settlement provider shall deliver a copy of the medicalrelease required under clause (B) of paragraph (1), a copy of the viator'sapplication for the viatical settlement contract, the notice required underparagraph (2) and a request for verification of coverage to the insurer thatissued the life policy that is the subject of the viatical transaction. Theform for verification shall be developed by the commissioner.
(4) The insurer shall respond to a request for verification of coveragesubmitted on an approved form by a viatical settlement provider within 30calendar days of the date the request is received and shall indicate whether,based on the medical evidence and documents provided, the insurer intends topursue an investigation at this time regarding the validity of the insurancecontract.
(5) Prior to or at the time of execution of the viatical settlement contract,the viatical settlement provider shall obtain a witnessed document in which theviator consents to the viatical settlement contract, represents that the viatorhas a full and complete understanding of the viatical settlement contract, thatsuch viator has a full and complete understanding of the benefits of the lifeinsurance policy, acknowledges that such viator is entering into the viaticalsettlement contract freely and voluntarily and, for persons with a terminal orchronic illness or condition, acknowledges that the insured has a terminal orchronic illness and that the terminal or chronic illness or condition wasdiagnosed after the life insurance policy was issued.
(6) If a viatical settlement broker performs any of these activities requiredof the viatical settlement provider, the viatical settlement provider is deemedto have fulfilled the requirements of this section.
(b) (1) All medical information solicited or obtained by any licensee shallbe subject to the applicable provisions of state law relating toconfidentiality of medical information.
(2) The provisions of this subsection shall expire July 1, 2013, unless thelegislature acts to reenact such provisions. The provisions of this sectionshall be reviewed by the legislature prior to July 1, 2013.
(c) All viatical settlement contracts entered into in this state shallprovide the viator with an unconditional right to rescind the contract for atleast 15 calendar days from the receipt of the viatical settlement proceeds. Ifthe insured dies during the rescission period, the viatical settlement contractshall be deemed to have been rescinded, subject to repayment to the viaticalsettlement provider or purchaser of all viatical settlement proceeds, and anypremiums, loans and loan interest that have been paid by the viaticalsettlement provider or purchaser.
(d) The viatical settlement provider shall instruct the viator to send theexecuted documents required to effect the change in ownership, assignment orchange in beneficiary directly to the independent escrow agent. Within threebusiness days after the date the escrow agent receives the document, or fromthe date the viatical settlement provider receives the documents, if the viatorerroneously provides the documents directly to the provider, the provider shallpay or transfer the proceeds of the viatical settlement into an escrow or trustaccount maintained in a state or federally-chartered financial institutionwhose deposits are insured by the federal deposit insurance corporation. Uponpayment of the settlement proceeds into the escrow account, the escrow agentshall deliver the original change in ownership, assignment or change inbeneficiary forms to the viatical settlement provider or related providertrust. Upon the escrow agent's receipt of the acknowledgment of the properlycompleted transfer of ownership, assignment or designation of beneficiary fromthe insurance company, the escrow agent shall pay the settlement proceeds tothe viator.
(e) Failure to tender consideration to the viator for the viatical settlementcontract within the time disclosed pursuant to clause (6) of subsection (a) ofK.S.A. 2009 Supp.40-5008, and amendments thereto, renders the viaticalsettlement contractvoidable by the viator for lack of consideration until the time considerationis tendered to and accepted by the viator.
(f) Contacts with the insured for the purpose of determining the healthstatus of the insured by the viatical settlement provider or viaticalsettlement broker after the viatical settlement has occurred shall only be madeby the viatical settlement provider or viatical settlement broker licensed inthis state or its authorized representatives and shall be limited to once everythree months for insureds with a life expectancy of more than one year, and tono more than once per month for insureds with a life expectancy of one year orless. The viatical settlement provider or viatical settlement broker shallexplain the procedure for these contacts at the time the viatical settlementcontract is entered into. The limitations set forth in this subsection shallnot apply to any contacts with an insured for reasons other than determiningthe insured's health status. Viatical settlement providers and viaticalsettlement brokers shall be responsible for the actions of their authorizedrepresentatives.
History: L. 2008, ch. 96, § 2; July 1.