Final review 8 - Life settlement

Chapter Recap

In this chapter you learned about life settlements. Let’s recap the key terms and definitions, as well as producer licensing and conduct regulations:

GENERAL CONCEPTS
Life Settlement	Owner of a life insurance contract sells a policy that is no longer needed to a third party Separate contract required
Parties to a Life Settlement	Owner - seeks to enter into a life settlement contract Life Settlement Broker - solicits or negotiates life settlement contracts for compensation; must be properly licensed Life Settlement Provider - enters into a life settlement contract with the owner; must be properly licensed
LICENSING REQUIREMENTS
Life Settlement Broker	Must be at least 18 years old, be trustworthy and competent, submit application, complete prelicensing education, pass licensing exam, pay required fees, and submit fingerprints Receive approval
Fingerprinting	Required for life settlement brokers and providers Submitted to the Division of Criminal Justice and to the FBI for national background check
PROHIBITED PRACTICES
Stranger-Originated Life Insurance (STOLI)	A person with no insurable interest originates a life insurance contract on another person; STOLIs are prohibited because they violate the concept of insurable interest; Life settlement contracts are not STOLIs
Prohibited Practices	Intentional deception or fraud; Avoiding disclosure of material information; Receiving consideration other than normal commissions or fees; Acting as a life settlement broker or intermediary while having an interest that policy (conflict of interest); Transacting life settlements without a proper license; Not remitting proceeds required by contract to the owner; Paying finder's fees or any other compensation to any owner's physician, attorney, accountant, insurance producer or consultant, or other person acting in these capacities; Paying life settlement broker's fees before they have been fully disclosed; and Paying life settlement payments in installments.