Tennessee State Guidelines

Relevant State Departments of Insurance Contact Info

Tennessee Department of Insurance –
Davy Crockett Tower, Twelfth Floor
500 James Robertson Parkway
Nashville, Tennessee 37243-0565

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Summary of the State:

    • Support
    • Oppose
    • Neutral
    • TBA
    • Summary Verbiage

TYPE OF LICENSE (LIFE SETTLEMENT/VIATICAL SETTLEMENT): LIFE SETTLEMENT (USES VIATICAL TERMINOLOGY)

WHAT DOES THE STATE DEFINE AS CONTESTABLE?: 2 YEARS

WHAT IS THE REQUIRED HOLDING PERIOD?: 2 YEARS. See: Tenn. Comp. R. & Regs. R. 0780-1-71-.04(1)(b).

WHEN DOES LICENSE NEED TO BE RENEWED?: Tenn. Code Ann. § 56-50-103(c). Licenses may be renewed from year to year on the anniversary date upon payment of the annual renewal fees promulgated by rule. Failure to pay the fees by the renewal date results in expiration of the license.

IS BROKER COMPENSATION DISCLOSURE REQUIRED?: YES. See: Tenn. Code Ann. § 56-50-108(c)(4).

IS THERE A MINIMUM PAYMENT REQUIREMENT?: YES. Tenn. Comp. R. & Regs. R. 0780-1-71-.05. Standards for Evaluation of Reasonable Payments.

(1) In order to assure that owners receive a reasonable return for settling an insurance policy, the following shall be the minimum discounted value that the owner must receive:

Insured’s Life Expectancy                                                                                     Minimum Percentage of Face Value Less Outstanding Loans Received by Owner
(a) Less than 6 months 80%
(b) At least 6 but less than 12 months 70%
(c) At least 12 but less than 18 months 65%
(d) At least 18 but less than 24 months 60%
(e) At least 24 but less than 30 months 55%
(f) At least 30 but less than 42 months 50%
(g) Forty-two months or more Owner must receive at least Cast Surrender Value of Policy

(2) The percentage may be reduced by [5%] for settling a policy written by an insurer rated less than the highest [4] categories by A.M. Best, or a comparable rating by another rating agency.

WHEN DOES THE MONEY NEED TO BE IN ESCROW?: Tenn. Code Ann. § 56-50-110(e). 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 (3) business days after the date the escrow agent receives the document 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 de-posits 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 or other designated representative of the viatical settlement provider. 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 viator.

IS THERE A NOTICE REQUIREMENT TO THE INSURED AFTER THE SALE?: YES. Tenn. Code Ann. § 56-50-108(d). If the viatical 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 twenty (20) days after the change.

IS THERE A NOTICE REQUIREMENT TO THE CARRIER BEFORE/AFTER THE SALE?: YES. Tenn. Code Ann. § 56-50-110(a)(2). Within twenty (20) days after a viator executes documents necessary to transfer any rights under an insurance policy or within twenty (20) days of entering any agreement, option, promise or any other form of understanding, expressed or implied, to viaticate the policy, the viatical settlement provider shall give written notice to the insurer that issued the insurance policy that the policy has or will become a viaticated policy. The notice shall be accompanied by the documents required by subdivision (a)(3).

WHAT IS THE RESCISSION PERIOD?: Tenn. Code Ann. § 56-50-110(c). The viator has the right to rescind a viatical settlement contract before the earlier of thirty (30) calendar days after the date upon which the viatical settlement contract is executed by all parties or fifteen (15) calendar days after the viatical settlement proceeds have been paid to the viator, as provided in subsection (f). Rescission, if exercised by the viator, is effective only if both notice of the rescission is given, and the viator repays all proceeds and any premiums, loans and loan interest paid on account of the viatical settlement 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 by the viator or the viator’s estate of all viatical settlement proceeds and any premiums, loans and loan interest paid on account of the viatical settlement within sixty (60) days of the insured’s death.

IS THERE A VOC REQUIREMENT (OWN/STATE/NAIC FORM)?: YES – NAIC or OWN – State Approved. Tenn. Code Ann. §56-50-110(a)(3).

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