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Relevant State Departments of Insurance Contact Info
Kentucky Department of Insurance –
500 Mero Street – 2 SE 11
Frankfort, Kentucky 40601
Summary of the State:
- Summary Verbiage
TYPE OF LICENSE LIFE SETTLEMENT
WHAT DOES THE STATE DEFINE AS CONTESTABLE?: 2 YEARS
WHAT IS THE REQUIRED HOLDING PERIOD?: 2 YEARS. See: KRS § 304.15-716(1).
WHEN DOES LICENSE NEED TO BE RENEWED?:N/A
IS BROKER COMPENSATION DISCLOSURE REQUIRED?: YES. See: KRS § 304.15-710(4)(c).
IS THERE A MINIMUM PAYMENT REQUIREMENT?: YES. 806 KAR 15:050.(Sec. 5). Standards for Evaluation of Reasonable Payments for Terminally or Chronically-Ill Insureds.
In order to ensure that owners receive a reasonable return for settling an insurance policy, the return for settling a policy shall be no less than the following payouts for insureds that are terminally or chronically ill:
(1) If an insured’s life expectancy is less than six (6) months, eighty (80) percent of the minimum percentage of face value, reduced by any outstanding loans received by the owner;
(2) If an insured’s life expectancy is at least six (6) months, but less than twelve (12) months, seventy (70) percent of the minimum percentage of face value, reduced by any outstanding loans received by the owner;
(3) If an insured’s life expectancy is at least twelve (12) months, but less than eighteen (18) months, sixty-five (65) percent of the minimum percentage of face value, reduced by any outstanding loans received by the owner;
(4) If an insured’s life expectancy is at least eighteen (18) months but less than twenty-five (25) months, sixty (60) percent of the minimum percentage of face value, reduced by any outstanding loans received by the owner; and
(5) If an insured’s life expectancy is twenty-five (25) months or more, the owner shall receive at least the greater of the cash surrender value or accelerated death benefit in the policy.
WHEN DOES THE MONEY NEED TO BE IN ESCROW?: KRS § 304.15-718. The life settlement provider shall instruct the owner to send the executed documents required to effect the change in ownership, assignment, or change in beneficiary directly to the independent escrow agent. Within three (3) business days after the date the escrow agent receives the docu-ment, or from the date the life settlement provider receives the documents, if the owner errone-ously sends the documents directly to the provider, the life settlement provider shall pay the pro-ceeds due to the owner to an escrow or trust account maintained in a state or federally chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Upon payment of the settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership, assignment, or change in beneficiary forms to the life settlement provider or related provider trust. Upon the escrow agent’s receipt of the acknowledgment of the properly completed transfer of ownership, assignment, or designation of beneficiary from the insurance company, the escrow agent shall pay the settlement proceeds to the owner.
IS THERE A NOTICE REQUIREMENT TO THE INSURED AFTER THE SALE?: YES – KRS § 304.15-710(3). If the life settlement provider transfers ownership or changes the beneficiary of the policy, the life settlement provider shall communicate the change in ownership or beneficiary to the in-sured within twenty (20) days after the change.
IS THERE A NOTICE REQUIREMENT TO THE CARRIER BEFORE/AFTER THE SALE?: YES – KRS § 304.15-715(12). Within twenty (20) days after an owner executes the life settlement contract, the provider shall give written notice to the insurer that issued that insurance policy that the policy has become subject to a life settlement contract. The notice shall be accompanied by the documents required by KRS 304.15-702(1)(b).
WHAT IS THE RESCISSION PERIOD?: KRS § 304.15-715(5). All life settlement contracts entered into in this state shall contain an unconditional right to rescind a life settlement contract before the earlier of thirty (30) calendar days after the date it is executed or fifteen (15) calendar days after the date of receipt of the proceeds of the life settle-ment contract by the owner. If exercised by the owner, rescission is effective only if both notice of the rescission is given, and within the rescission period all proceeds, and any premiums, loans, and loan interest are repaid to the life settlement provider. If the insured dies during the rescission period, the life settlement contract shall be deemed to have been rescinded subject to repayment of all proceeds and any premiums, loans, and loan interest to the life settlement provider. The life settlement provider shall effectuate the change of ownership of the policy or certificate to the owner immediately upon effective rescission by the owner.
IS THERE A VOC REQUIREMENT (OWN/STATE/NAIC FORM)?: YES – STATE or OWN – State Approved. See: KRS § 304.15-715(2).
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