New Jersey State Guidelines

Related Resource Links

• Legislation:

https://www.njleg.state.nj.us/2012/Bills/A0500/237_I1.HTM

• Regulatory Guidance:

https://www.state.nj.us/dobi/division_consumers/insurance/viaticalsettlements.htm

• Regulatory Forms:

Provider Application
Provider Renewal Application
Annual Report Template

Relevant State Departments of Insurance Contact Info

New Jersey Department of Banking and Insurance –
20 West State Street
PO Box 325
Trenton, NJ 08625
Phone: 609-292-7272

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TYPE OF LICENSE: LIFE SETTLEMENT (USES VIATICAL TERMINOLOGY)

WHAT DOES THE STATE DEFINE AS CONTESTABLE?: 2 YEARS

WHAT IS THE REQUIRED HOLDING PERIOD?: 2 YEARS. See: N.J.S.A. § 17B:30B-10.

WHEN DOES LICENSE NEED TO BE RENEWED?: N.J.S.A. § 17B:30B-3(d). A viatical settlement provider license may be renewed from year to year on the anniversary date upon payment of the annual renewal fee in an amount set by the commissioner by regulation. Failure to pay the fee by the renewal date shall result in expiration of the license.

IS BROKER COMPENSATION DISCLOSURE REQUIRED?: NO

IS THERE A MINIMUM PAYMENT REQUIREMENT?: YES. See: N.J.A.C. 11:4-35.10. Standards for evaluation of reasonable viatical settlement proceeds.
(a) Viatical settlement providers and viatical settlement brokers are prohibited from entering into viatical settlements with viators who are insured policy owners or certificate holders of individual or group life insurance policies containing accelerated death benefit provisions or riders that enable the insurer to pay more to the policy owner or certificateholder than would be paid pursuant to the viatical settlement except as provided in (b) below.
(b) Viatical settlement providers and viatical settlement brokers shall obtain from viators a signed statement that the viators have contacted their life insurer and that their policy does not include an accelerated death benefits clause as provided in N.J.A.C. 11:4-30; or that they had the opportunity to contact their life insurer and chose not to do so, even after it was explained to them that their policy may contain a clause that would enable them to receive more money than the viatical settlement provider is offering.
(c) A viatical settlement provider or broker shall not enter into a viatical settlement that provides a payment to the viator that is unreasonable or unjust. In determining whether a payment is unreasonable or unjust, the Commissioner may consider, among other factors, the estimated life expectancy of the viator, the premiums due under the policy, the availability of loan or other values to reduce the cost of providing the settlement to the viator, reasonable costs of capital and expenses of doing business, and provisions for refund of premiums or payment of interest on death benefits.

WHEN DOES THE MONEY NEED TO BE IN ESCROW?: N.J.S.A. § 17B:30B-9 (d). The viatical settlement provider shall instruct the viator 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 business days after the date the escrow agent receives the documents (or from the date the viatical settlement provider receives the documents, if the viator erroneously provides the documents directly to the provider), the provider shall pay or transfer the proceeds of the viatical 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 (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 viatical settlement provider or related provider trust. Upon the escrow agent’s receipt of the acknowledgment of the properly completed transfer of ownership or designation of beneficiary from the insurance company, the escrow agent shall pay the viatical settlement proceeds to the viator.

IS THERE A NOTICE REQUIREMENT TO THE INSURED AFTER THE SALE?: YES. N.J.S.A. § 17B:30B-8(c). If the viatical settlement provider transfers ownership or changes the beneficiary of the policy, the viatical 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?: N.J.S.A. § 17B:30B-9 (c). All viatical settlement contracts entered into in this State shall provide the viator with an un-conditional right to rescind the 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 receipt of the viatical settlement proceeds by the viator. If exercised by the viator, rescission 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 within the rescission period. If the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment to the viatical settlement provider or purchaser of all viatical settlement proceeds, and any premiums, loans and loan interest that have been paid by the settlement provider.

IS THERE A VOC REQUIREMENT (OWN/STATE/NAIC FORM)?: YES – NAIC or OWN – State Approved. See: N.J.S.A. §17B:30B-9 (a)(2).