31A-36-109 - General requirements.
31A-36-109. General requirements.
(1) If a life settlement provider transfers ownership or changes the beneficiary of a settledpolicy, the life settlement provider shall inform the insured of the transfer or change within 20calendar days.
(2) A life settlement provider that enters a life settlement shall first obtain:
(a) if the owner is the insured, a written statement from a licensed attending physicianthat the owner is of sound mind and under no constraint or undue influence to enter a lifesettlement;
(b) a witnessed document in which the owner represents that:
(i) the owner has a full and complete understanding of the life settlement and the benefitsof the policy;
(ii) the owner has entered the life settlement freely and voluntarily; and
(iii) if applicable, the insured is terminally ill or chronically ill and that the illness wasdiagnosed after the policy was issued; and
(c) a document in which the insured consents to the release of the insured's medicalrecords to:
(i) a life settlement provider;
(ii) a life settlement producer; and
(iii) the insurer that issued the policy covering the insured.
(3) Within 20 calendar days after an owner executes documents necessary to transferrights under a policy, or enters into an agreement in any form, express or implied, to settle thepolicy, the life settlement provider shall give written notice to the issuer of the policy that thepolicy has or will become settled. The notice must be accompanied by a copy of the documentsrequired by Subsection (4).
(4) The life settlement provider shall deliver a copy of the following to the insurer thatissued the policy that is the subject of the life settlement:
(a) the medical release required under Subsection (2)(c);
(b) a copy of the owner's application for the life settlement; and
(c) the notice required under Subsection (3).
(5) (a) An insurer shall complete and return a request for verification of coverage notlater than 30 calendar days after the day on which the request is received. In its response, theinsurer shall indicate whether the insurer intends to pursue an investigation regarding the validityof the insurance contract.
(b) An insurer may not require that a person making a request under Subsection (5)(a)provide the insurer additional information in order for the insurer to comply with Subsection(5)(a), if the person provides the insurer:
(i) a request for verification of coverage made on an original, facsimile, or electroniccopy of a verification of coverage for a policy document adopted by the commissioner by rulemade in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act; and
(ii) an authorization that accompanies the verification described in Subsection (5)(b)(i)signed by the owner.
(6) Medical information solicited or obtained by a life settlement provider or lifesettlement producer is subject to:
(a) other laws of this state relating to the confidentiality of the information; and
(b) a rule relating to privacy of medical or personal information promulgated by the
commissioner under Title V, Section 505 of the Gramm-Leach-Bliley Act of 1999, 15 U.S.C.Sec. 6805.
(7) (a) (i) A life settlement entered into in this state must reserve to the owner anunconditional right to rescind the life settlement within the rescission period provided for in thisSubsection (7).
(ii) The rescission period ends 15 calendar days after the day on which the ownerreceives the proceeds of the life settlement.
(iii) Rescission by an owner may be conditioned on the owner giving notice and repayingto the life settlement provider within the rescission period all proceeds of the life settlement andany premium, loan, or loan interest paid by or on behalf of the life settlement provider inconnection with or as a consequence of the life settlement.
(b) If the insured dies during the rescission period, the life settlement is considered to berescinded if the proceeds, premiums, loans, and loan interest paid by the life settlement provideror life settlement purchaser are repaid within 60 calendar days of the day on which the insureddies.
(8) (a) Contact with an insured to determine the health status of the insured after a lifesettlement may be made only by a life settlement provider or life settlement producer that islicensed in this state, or its authorized representative, and no more than:
(i) once every three months if the insured has a life expectancy of one year or more; or
(ii) once every month if the insured has a life expectancy of less than one year.
(b) A life settlement provider or life settlement producer shall explain the procedure forthe contacts allowed under this Subsection (8) to the owner when the application for the lifesettlement is signed by all participants in the life settlement.
(c) The limitations of this Subsection (8) do not apply to contacts for purposes other thandetermining health status.
(d) A life settlement provider or life settlement producer is responsible for the acts of itsauthorized representative in violation of this Subsection (8).
(9) The trustee of a related provider trust must agree in writing with the life settlementprovider that:
(a) the life settlement provider is responsible for ensuring compliance with all statutoryand regulatory requirements; and
(b) the trustee will make all records and files related to life settlements available to thecommissioner as if those records and files were maintained directly by the life settlementprovider.
(10) Regardless of the method of compensation, a life settlement producer:
(a) represents only the owner; and
(b) owes a fiduciary duty to the owner to act according to the owner's instructions and inthe best interest of the owner.
Amended by Chapter 355, 2009 General Session