Chapter 8 - Life Settlements

Question 1

In a life settlement contract, who does the life settlement broker represent?

Answer 1

The owner

Question 2

What does the term Business of Life Settlement refer to?

Answer 2

Any activity relating to the solicitation and sale of an insurance policy to a third party who has no insurance interest in the insured (i.e. soliciting, negotiating, effectuating, monitoring, or tracking life insurance contracts).

Question 3

What are the requirements a person must fulfill to become a licensed life insurance settlement broker? (2)

Answer 3

• Fingerprints - will be used for a criminal history record check so the Superintendent may assess the character and trustworthiness of the applicant prior to licensing.
• Must be at least 18 years old

Question 4

Who must approve life settlement contracts?

Answer 4

The Superintendent of Insurance

Question 5

Who is the owner of a life settlement contract?

Answer 5

The person selling the contract.

Question 6

What is a STOLI?

Answer 6

Stranger Owned Life Insurance - Usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.

Question 7

For what type of policy does the seller need to be terminally ill?

Answer 7

Viatical settlements

Question 8

Life Settlements usually involve what types of insurance policies? (4)

Answer 8

• Policies with a face value of $250,000 or more
• Key Person Coverage
• Corporate-owned policies
• Policies representing excess coverage that is no longer needed, and could be sold for an amount greater than the current cash value.