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TYPE OF LICENSE: LIFE & VIATICAL SETTLEMENT (Uses Both Terminologies Interchangeably)
WHAT DOES THE STATE DEFINE AS CONTESTABLE?: 2 YEARS
WHAT IS THE REQUIRED HOLDING PERIOD?: 2 YEARS. See: 24-A M.R.S. § 6811(5).
WHEN DOES LICENSE NEED TO BE RENEWED?: 24-A M.R.S. § 6803(3). A license for a settlement provider is continuous as long as the licensee remains qualified. The settlement provider must pay an annual fee not to exceed $ 400 in accordance with section 601. Failure to pay the fee within the terms prescribed may result in the revocation of the license unless cured within 5 days of written notice of failure to pay to the principal office of the licensee.
IS BROKER COMPENSATION DISCLOSURE REQUIRED?: YES – 24-A M.R.S. § 6808-A(2)(G). The identity of all persons compensated directly or indirectly by the settlement provider for the settlement contract, the amount of compensation paid to each and the method of calculating that compensation.
IS THERE A MINIMUM PAYMENT REQUIREMENT?: YES – CMR 02-031-931(Sec.5). Standards for Evaluation of Reasonable Payments.
A. For viatical settlements, in which the insured is chronically or terminally ill, the compensation for viaticating a life insurance policy or certificate on which no future premium is due, whether because it is a paid-up policy, because of a disability waiver, or for any other reason, shall not be less than the following amounts:
Insured’s Life Expectancy / Minimum Percentage of Net Face Amount Received by Viator
- Less than 6 months / (81%)
- At least 6 but less than 12 months / (77%)
- At least 12 but less than 18 months / (74%)
- At least 18 but less than 24 months / (70%)
- 24 months or more / (55%)
B. A settlement producer or provider may not seek or obtain any compensation from the viator.
C. Except as provided in subsection E, the viator will not be responsible for any future premiums after the date of the settlement contract, and the amount of compensation received by the viator may not be reduced by the amount of premium required to keep the policy in force, except as provided in subsection D.
D. If the life expectancy is less than 30 months and future premium is due on the policy, the minimum amounts in Subsection A may be reduced by the amount of premium due during the insured’s life expectancy.
E. If a settlement provider enters into a settlement contract that allows the viator to retain an interest in the policy, the settlement contract shall contain the following provisions:
(1) A provision that the settlement provider will effect the transfer of the amount of the death benefit only to the extent or portion of the amount viaticated. Benefits in excess of the amount viaticated shall be paid directly to the viator’s beneficiary by the insurance company;
(2) A provision that the settlement provider will, upon acknowledgment of the perfection of the transfer, either;
(a) Advise the insured, in writing, that the insurance company has confirmed the viator’s interest in the policy; or
(b) Send a copy of the instrument sent from the insurance company to the settlement provider that acknowledges the viator’s interest in the policy; and
(3) A provision that apportions the premiums to be paid by the settlement provider and the viator. It is permissible for the viatical settlement contract to specify that all premiums shall be paid by the viatical settlement company. The contract may also require that the viator reimburse the viatical settlement provider for the premiums attributable to the retained interest.
WHEN DOES THE MONEY NEED TO BE IN ESCROW?: 24-A M.R.S. § 6809(4). The settlement provider shall designate an independent escrow agent and instruct the viator to send the executed documents required to effect the change in ownership or assignment or change in beneficiary directly to the independent escrow agent. Within 3 business days after the date the escrow agent receives the document, or from the date the settlement provider receives the documents, if the viator erroneously provides the documents directly to the provider, the settlement provider shall pay or transfer the proceeds of the settlement into an escrow or trust account maintained in a state or federally chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation or its successor. Upon payment of the settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership or assignment or change in beneficiary forms to the settlement provider or related provider trust. Upon the escrow agent’s receipt of the acknowledgment of the properly completed transfer of ownership or assignment or designation of beneficiary from the insurance company, the escrow agent shall pay the settlement proceeds to the viator.
IS THERE A NOTICE REQUIREMENT TO THE INSURED AFTER THE SALE?: YES – 24-A M.R.S. § 6808-A(3). If the settlement provider transfers ownership or changes the beneficiary of the insurance policy, the settlement provider shall communicate the change in ownership or beneficiary to the insured within 20 days after the change.
IS THERE A NOTICE REQUIREMENT TO THE CARRIER BEFORE/AFTER THE SALE?: NO.
WHAT IS THE RESCISSION PERIOD?: 24-A M.R.S. § 6809(3). All settlement contracts must contain a provision that the viator has the right to rescind a settlement contract before the earlier of 30 calendar days after the date upon which the settlement contract is executed by all parties or 15 calendar days after the date upon which payment is received by the viator as provided in section 6808. Rescission if exercised by the viator is effective only if both notice of the rescission is given and a full repayment of all proceeds and any premiums, loans and loan interest to the settlement provider is made with-in the rescission period. If the insured dies during the rescission period, the settlement contract is deemed to have been rescinded, subject to repayment of all proceeds and any premiums, loans and loan interest to the settlement provider.
IS THERE A VOC REQUIREMENT (OWN/STATE/NAIC FORM)?: YES – OWN – State Approved – 24-A M.R.S § 6809(1). The request for verification of coverage must be made on a form approved by the superintendent.
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