Oregon State Guidelines

Related Resource Links

• Legislation:

https://www.oregonlaws.org/ors/chapter/744

• Regulation:

https://secure.sos.state.or.us/oard/viewSingleRule.action?ruleVrsnRsn=202819

• Regulatory Forms:

License Application

Appointment/Affiliation Notice

Bond Requirement

Contract Checklist

Relevant State Departments of Insurance Contact Info

Oregon Department of Insurance –
P.O. Box 14480
Salem, Oregon 97309-0405

Email the Division of Insurance
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TYPE OF LICENSE (LIFE SETTLEMENT/VIATICAL SETTLEMENT): LIFE SETTLEMENT

WHAT DOES THE STATE DEFINE AS CONTESTABLE?: 2 YEARS

WHAT IS THE REQUIRED HOLDING PERIOD?: 5 YEARS. See: ORS § 744.367(1).

WHEN DOES LICENSE NEED TO BE RENEWED?: ORS § 744.331(2). Unless the Director of the Department of Consumer and Business Services designates another date, a license expires on the last day of the month in which the second anniversary of the initial issuance date of the license occurs, and on the second anniversary following each renewal.

IS BROKER COMPENSATION DISCLOSURE REQUIRED?: YES. See: ORS § 744.354(3)(j).

IS THERE A MINIMUM PAYMENT REQUIREMENT?: YES. OAR § 836-014-0270. Standards for Evaluation of Reasonable Payments; Definition of “Terminal Illness or Condition”.

(1) If the insured is terminally ill or chronically ill, payments under life settlement contracts must be fair and equitable and may not in any event be less than the following: Insured’s Life Expectancy — Minimum Percentage of Face Value Less Outstanding Loans Received by Policyholder or Certificate Holder

(a) Less than six months — 85 percent;
(b) At least six but less than 12 months — 80 percent;
(c) At least 12 but less than 18 months — 75 percent;
(d) At least 18 but less than 24 months — 70 percent;

(2) If the insured is chronically ill, payments under life settlement contracts must be fair and equitable and may not in any event be less than the following: Insured’s Life Expectancy — Minimum Percentage of Face Value Less Outstanding Loans Received by Policyholder or Certificate Holder

(a) At least 24 but less than 36 months — 60 percent;
(b) 36 months or more – The insured must receive at least the greater of:
(A) 50 percent;
(B) The cash surrender value; or
(C) The accelerated death benefit in the policy.

(3) If the insured is not terminally ill or chronically ill, the owner must receive a reasonable return for entering into a life settlement agreement. The life settlement contract shall not provide a payment to the insured that is unreasonable or unjust. In determining whether a payment is unreasonable or unjust, the Director may consider the following factors:

(a) The face amount being purchased;
(b) Any policy loan in effect on the policy being purchased;
(c) The life expectancy of the insured at the time of purchase;
(d) The age of the insured at the time of purchase;
(e) The future premiums that must be paid to minimally keep the policy in force;
(f) The cash surrender value or accelerated death benefit available from the policy;
(g) The method for allocating internal costs relating directly to the acquisition of this policy;
(h) The payment of any commission, fee or other expense to a life settlement broker or any other external party;
(i) If known, any future interest payments due for funds borrowed to purchase this policy;
(j) The applicable rating at the time of purchase of the insurance company that issued the policy by a rating service generally recognized by the insurance industry, regulators and consumer groups;
(k) Whether the policy is within the contestable period; and
(l) Other factors that the Director considers relevant.

(4) A payment may be reduced by the minimum premium required under sections (1) or (2) of this rule to keep the contract in force for the duration of the remaining life expectancy of the life that is the subject of the life settlement
contract. The minimum premium includes any premiums payable for additional benefits retained at the option of the policyholder or certificate holder. Other than this allowable reduction in payment, there shall be no other retention for expenses or broker’s fees that would reduce payments below the minimum levels established in sections (1) or (2) of this rule.

(5) The estimated life expectancy of an insured person must be determined according to sound actuarial principles or other sound methodology acceptable to the director.

WHEN DOES THE MONEY NEED TO BE IN ESCROW?: ORS § 744.364(5 (b). Within three business days after the date the escrow agent receives the document, or from the date the life settlement provider receives the documents, if the owner erroneously provides the documents directly to the provider, the provider shall pay or transfer the proceeds of the life 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.

IS THERE A NOTICE REQUIREMENT TO THE INSURED AFTER THE SALE?: YES. ORS § 744.354(4). If the life settlement provider transfers ownership or changes the beneficiary of the insurance policy, the provider shall communicate in writing 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?: YES. ORS § 744.364(1)(b). Within 20 days after an owner executes documents necessary to transfer any rights under an insurance policy or, if the insured is terminally ill, within 20 days after an owner entering any agreement, option, promise or any other form of understanding, expressed or implied, to transfer the policy for value, the life settlement provider shall give written notice to the insurer that issued the insurance policy that the policy has or will become a settled policy. The notice must be accompanied by the documents required by paragraph (c) of this subsection.

WHAT IS THE RESCISSION PERIOD?: ORS § 744.364. (3)(a). All life settlement contracts entered into in this state must provide the owner with an absolute right to rescind the contract before the earlier of 60 calendar days after the date upon which the life settlement contract is executed by all parties or 30 calendar days after the life settlement proceeds have been sent to the owner under subsection (5) of this section.

(b) The life settlement provider may condition rescission upon the owner both giving notice and repaying to the life settlement provider within the rescission period all proceeds of the settlement and any premiums, loans and loan
interest paid by or on behalf of the life settlement provider in connection with or as a consequence of the life settlement.

(c) If the insured dies during the rescission period, the life settlement contract is deemed to have been rescinded, subject to repayment within 60 calendar days of the death of the insured to the life settlement provider or purchaser of
all life settlement proceeds and any premiums, loans and loan interest that have been paid by the life settlement provider or purchaser.

(d) In the event of any rescission, if the life settlement provider has paid commissions or other compensation to a life settlement broker in connection with the rescinded transaction, the life settlement broker shall refund all such
commissions and compensation to the life settlement provider within five business days following receipt of written demand from the life settlement provider. The demand must be accompanied by either the owner’s notice of rescission if rescinded at the election of the owner, or the notice of the death of the insured if rescinded by reason of the death of the insured within the applicable rescission period.

(4) The life settlement purchaser shall have the right to rescind a life settlement contract within three days after the disclosures mandated by ORS 744.354 (7) are received by the purchaser.

IS THERE A VOC REQUIREMENT (OWN/STATE/NAIC FORM)?: YES – STATE or OWN – State Approved. ORS § 744.364(1)(c) and (d).