Questions
4: In a life settlement contract, who does the life settlement broker represent?
A The insurer
B The beneficiary
C The life settlement intermediary
D The owner
Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.
9: Which of the following best defines the owner of a life settlement contract?
A A person insured under the contract
B A fiduciary for the contract
C An insurance provider
D A person who is selling the contract
The term "owner" refers to the owner of the policy who may seek to enter into a life settlement contract. This does not include an insurance provider, a qualified institutional buyer, a financing entity, a special purpose entity, or a related provider trust.
10: Life settlement contracts must be approved by which of the following?
A The policyowner
B The NAIC
C The state's attorney general
D The Superintendent of Insurance
The Superintendent must approve all life settlement contract forms as well as the final contract.
14: An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of
A A STOLI policy.
B A prearranged funeral plan.
C A viatical settlement.
D Third-party ownership.
Stranger-originated life insurance (STOLI) policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.
15: Which of the following is NOT true of life settlements?
A They could be sold for an amount greater than the current cash value.
B They involve insurance policies with large face amounts.
C The seller must be terminally ill.
D They could be used for a key person coverage.
With Life Settlements, unlike with viatical settlements, the seller does not need to be terminally ill. They usually involve life insurance policies with a face amount of $250,000 or more, "key-person" coverage, corporate owned policies, or policies representing excess coverage that is no longer needed, and could be sold for an amount greater than the current cash value.