Advertising

(a) A registered life settlement broker or licensed provider who is registered or licensed pursuant to this chapter may conduct or participate in advertisements within this state. Such advertisements shall comply with all advertising and marketing laws of this state and rules and regulations promulgated by the Commissioner that are applicable to life insurers or to life settlement brokers and providers licensed pursuant to this chapter. 1021 33-59-9 (b) Advertisements shall be accurate, truthful, and not misleading in fact or by implication. (c) No person or trust shall: (1) Directly or indirectly, market, advertise, solicit, or otherwise promote the purchase of a policy for the sole purpose of or with a primary emphasis on settling the policy; or (2) Use the words ‘‘free,’’ ‘‘no cost,’’ or words of similar import in the marketing, advertising, soliciting, or otherwise promoting of the purchase of a policy. History. — Code 1981, § 33-59-8, enacted by Ga. L. 2009, p. 370, § 1/SB 61. Editor’s notes. — Ga. L. 2009, p. 370, § 1/SB 61, effective July 1, 2009, redesignated former Code Section 33-59-8 as present Code Section 33-59-9. 33-59-9. Required written disclosures; consequence for failure to provide. (a) The provider or broker shall provide in writing, in a separate document that is signed by the owner, the following information no later than the date of the application for a life settlement contract: (1) The fact that possible alternatives to life settlement contracts exist, including, but not limited to, accelerated benefits offered by the issuer of the life insurance policy; (2) The fact that some or all of the proceeds of a life settlement contract may be taxable and that assistance should be sought from a professional tax adviser; (3) The fact that the proceeds from a life settlement contract could be subject to the claims of creditors; (4) The fact that receipt of proceeds from a life settlement contract may adversely affect the recipient’s eligibility for public assistance or other government benefits or entitlements and that advice should be obtained from the appropriate agencies; (5) The fact that the owner has a right to terminate a life settlement contract within 15 days of the date it is executed by all parties and the owner has received the disclosures contained in this Code section. Rescission, if exercised by the owner, is effective only if both notice of the rescission is given and the owner repays all proceeds and any premiums, loans, and loan interest paid on account of the provider within the rescission period. If the insured dies during the rescission period, the contract shall be deemed to have been rescinded subject to repayment by the owner or the owner’s estate of all proceeds and any premiums, loans, and loan interest to the provider; 1022 33-59-9 (6) The fact that proceeds will be sent to the owner within three business days after the provider has received the insurer or group administrator’s acknowledgment that ownership of the policy or interest in the certificate has been transferred and the beneficiary has been designated in accordance with the terms of the life settlement contract; (7) The fact that entering into a life settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy or certificate of a group policy, to be forfeited by the owner and that assistance should be sought from a professional financial adviser; (8) The method of calculating the compensation paid or to be paid to the life settlement broker or any other person acting for the owner in connection with the transaction, where the term ‘‘compensation’’ includes any thing of value paid or given; (9) The date by which the funds will be available to the owner and the transmitter of the funds; (10) The fact that the Commissioner shall require delivery of a buyer’s guide or a similar consumer advisory package in the form prescribed by the Commissioner to owners during the solicitation process; (11) The disclosure document shall contain the following language: ‘‘All medical, financial, or personal information solicited or obtained by a provider or life settlement broker about an insured, including the insured’s identity or the identity of family members, a spouse, or a significant other, may be disclosed as necessary to effect the life settlement contract between the owner and provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two years.’’; (12) The fact that the Commissioner shall require providers and life settlement brokers to print separate signed fraud warnings on their applications and on their life settlement contracts as follows: ‘‘Any person who knowingly presents false information in an application for insurance or life settlement contract is guilty of a crime and may be subject to fines and confinement in prison.’’; (13) The fact that the insured may be contacted by either the provider or life settlement broker or its authorized representative for the purpose of determining the insured’s health status or to verify the insured’s address. This contact is limited to once every three months 1023 33-59-9 if the insured has a life expectancy of more than one year and no more than once per month if the insured has a life expectancy of one year or less; (14) The affiliation, if any, between the provider and the issuer of the insurance policy to be settled; (15) That a life settlement broker represents exclusively the owner, and not the insurer or the provider or any other person, and owes a fiduciary duty to the owner, including a duty to act according to the owner’s instructions and in the best interest of the owner; (16) The document shall include the name, address, and telephone number of the provider; (17) The name, business address, and telephone number of the independent third-party escrow agent, and the fact that the owner may inspect or receive copies of the relevant escrow or trust agreements or documents; and (18) The fact that a change of ownership could in the future limit the insured’s ability to purchase future insurance on the insured’s life because there is a limit to how much coverage insurers will issue on one life. (b) The written disclosures shall be conspicuously displayed in any life settlement contract furnished to the owner by a provider including any affiliations or contractual arrangements between the provider and the life settlement broker. (c) A life settlement broker shall provide the owner and the provider with at least the following disclosures no later than the date the life settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the life settlement contract or in a separate document signed by the owner and provide the following information: (1) The name, business address, and telephone number of the life settlement broker; (2) A full, complete, and accurate description of all the offers, counter-offers, acceptances, and rejections relating to the proposed life settlement contract; (3) A written disclosure at the inception of the brokerage arrangement of any affiliations or contractual arrangements between the life settlement broker and any person making an offer in connection with the proposed life settlement contracts; (4) The name of each life settlement broker who receives compensation and the amount of compensation received by that life settlement broker, which compensation includes any thing of value paid or 1024 33-59-10 given to the life settlement broker in connection with the life settlement contract; and (5) A complete reconciliation of the gross offer or bid by the provider to the net amount of proceeds or value to be received by the owner. For the purpose of this paragraph, ‘‘gross offer or bid’’ means the total amount or value offered by the provider for the purchase of one or more life insurance policies, inclusive of commissions and fees. (d) The failure to provide the disclosures or rights described in this Code section shall be deemed an unfair trade practice pursuant to Code Section 33-59-17. History. — Code 1981, § 33-59-8, enacted by Ga. L. 2005, p. 998, § 1/SB 217; Code 1981, § 33-59-9, as redesignated by Ga. L. 2009, p. 370, § 1/SB 61. Editor’s notes. — Ga. L. 2009, p. 370, § 1/SB 61, effective July 1, 2009, redesignated former Code Section 33-59-9 as present Code Section 33-59-11. 33-59-10. Lender-financed premiums using policy as collateral; disclosures and certifications. (a) In addition to other questions an insurance carrier may lawfully pose to a life insurance applicant, insurance carriers may inquire in the application for insurance whether the proposed owner intends to pay premiums with the assistance of financing from a lender that will use the policy as collateral to support the financing. (b) If, as described in paragraph (11) of Code Section 33-59-2, the loan provides funds which can be used for a purpose other than paying for the premiums, costs, and expenses associated with obtaining and maintaining the life insurance policy and loan, the application shall be rejected as a violation of the prohibited practices in Code Section 33-59-13. (c) If the financing does not violate Code Section 33-59-13 in this manner, the insurance carrier: (1) May make disclosures, including, but not limited to, disclosures such as the following, to the applicant and the insured, either on the application or an amendment to the application to be completed no later than the delivery of the policy: ‘‘If you have entered into a loan arrangement where the policy is used as collateral and the policy changes ownership at some point in the future in satisfaction of the loan, the following may be true: (A) A change of ownership could lead to a stranger owning an interest in the insured’s life; (B) A change of ownership could in the future limit your ability to purchase future insurance on the insured’s life because there is a limit to how much coverage insurers will issue on one life; 1025 33-59-11 (C) Should there be a change of ownership and you wish to obtain more insurance coverage on the insured’s life in the future, the insured’s higher issue age, a change in health status, or other factors may reduce the ability to obtain coverage or may result in significantly higher premiums; and (D) You should consult a professional adviser since a change in ownership in satisfaction of the loan may result in tax consequences to the owner, depending on the structure of the loan.’’; and (2) May require certifications, such as the following, from the applicant and the insured: ‘‘(A) I have not entered into any agreement or arrangement providing for the future sale of this life insurance policy; (B) My loan arrangement for this policy provides funds sufficient to pay for some or all of the premiums, costs, and expenses associated with obtaining and maintaining my life insurance policy, but I have not entered into any agreement by which I am to receive consideration in exchange for procuring this policy; and (C) The borrower has an insurable interest in the insured.’’ History. — Code 1981, § 33-59-10, enacted by Ga. L. 2009, p. 370, § 1/SB 61. Editor’s notes. — Former Code Section 33-59-10 (Code 1981, § 33-59-10, enacted by Ga. L. 2005, p. 998, § 1/SB 217), relating to contracts entered into within two years of the issuance of the policy being prohibited, was repealed by Ga. L. 2009, p. 370, § 1/SB 61, effective July 1, 2009. 33-59-11. Required documents and information; confidentiality; seller’s right to rescind; escrow proceedings; failure to tender consideration; limitation on contracts with the insured for the purpose of determining the insured’s health status. (a) A provider entering into a life settlement contract, wherein the insured is terminally or chronically ill, shall first obtain: (1) If the owner is the insured, a written statement from a licensed attending physician that the owner is of sound mind and under no constraint or undue influence to enter into a settlement contract; and (2) A document in which the insured consents to the release of his or her medical records to a provider, life settlement broker, or insurance producer and, if the policy was issued less than two years from the date of application for a settlement contract, to the insurance company that issued the policy. (b) The insurer shall respond to a request for verification of coverage submitted by a provider, life settlement broker, or life insurance 1026 33-59-11 producer not later than 30 calendar days after the date the request is received. The request for verification of coverage must be made on a form approved by the Commissioner. The insurer shall complete and issue the verification of coverage or indicate in which respects it is unable to respond. In its response, the insurer shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation at this time regarding the validity of the insurance contract. (c) Before or at the time of execution of the settlement contract, the provider shall obtain a witnessed document in which the owner consents to the settlement contract, represents that the owner has a full and complete understanding of the settlement contract, represents that the owner has a full and complete understanding of the benefits of the policy, acknowledges that the owner is entering into the settlement contract freely and voluntarily, and, for persons with a terminal or chronic illness or condition, acknowledges that the insured has a terminal or chronic illness and that the terminal or chronic illness or condition was diagnosed after the policy was issued. (d) The insurer shall not unreasonably delay effecting change of ownership or beneficiary with any life settlement contract lawfully entered into in this state or with a resident of this state. (e) If a life settlement broker or life insurance producer performs any of these activities required of the provider, the provider is deemed to have fulfilled the requirements of this Code section. (f ) If a life settlement broker performs those verification of coverage activities required of the provider, the provider is deemed to have fulfilled the requirements of subsection (a) of Code Section 33-59-9. (g) Within 20 days after an owner executes the life settlement contract, the provider shall give written notice to the insurer that issued that insurance policy that the policy has become subject to a life settlement contract. The notice shall be accompanied by the documents required by Code Section 33-59-10. (h) All medical information solicited or obtained by any licensee shall be subject to the applicable provision of state law relating to confidentiality of medical information if not otherwise provided in this chapter. (i) All life settlement contracts entered into in this state shall provide that the owner may rescind the contract on or before 15 days after the date it is executed by all parties thereto. Rescission, if exercised by the owner, is effective only if both notice of the rescission is given and the owner repays all proceeds and any premiums, loans, and loan interest paid on account of the provider within the rescission period. If the insured dies during the rescission period, the contract 1027 33-59-11 shall be deemed to have been rescinded subject to repayment by the owner or the owner’s estate of all proceeds and any premiums, loans, and loan interest to the provider. (j) Within three business days after receipt from the owner of documents to effect the transfer of the insurance policy, the provider shall pay the proceeds of the settlement to an escrow or trust account managed by a trustee or escrow agent in a state or federally chartered financial institution pending acknowledgment of the transfer by issuer of the policy. The trustee or escrow agent shall be required to transfer the proceeds due to the owner within three business days of acknowledgment of the transfer from the insurer. (k) Failure to tender the life settlement contract proceeds to the owner by the date disclosed to the owner renders the contract voidable by the owner for lack of consideration until the time the proceeds are tendered to and accepted by the owner. A failure to give written notice of the right of rescission hereunder shall toll the right of rescission until 30 days after the written notice of the right of rescission has been given. (l) Any fee paid by a provider, party, individual, or an owner to a life settlement broker in exchange for services provided to the owner pertaining to a life settlement contract shall be computed as a percentage of the offer obtained, not the face value of the policy. Nothing in this Code section shall be construed to prohibit a life settlement broker from reducing such life settlement broker’s fee below this percentage if the life settlement broker so chooses. (m) The life settlement broker shall disclose to the owner any thing of value paid or given to a life settlement broker which relates to a life settlement contract. (n) No person at any time prior to, or at the time of, the application for, or issuance of, a policy, or during a two-year period commencing with the date of issuance of the policy, shall enter into a life settlement contract regardless of the date the compensation is to be provided and regardless of the date the assignment, transfer, sale, devise, bequest, or surrender of the policy is to occur. This prohibition shall not apply if the owner certifies to the provider that: (1) The policy was issued upon the owner’s exercise of conversion rights arising out of a group or individual policy, provided that the total of the time covered under the conversion policy plus the time covered under the prior policy is at least 24 months. The time covered under a group policy shall be calculated without regard to a change in insurance carriers, provided that the coverage has been continuous and under the same group sponsorship; or (2) The owner submits independent evidence to the provider that one or more of the following conditions have been met within the two-year period: 1028 33-59-12 (A) The owner or insured is terminally or chronically ill; (B) The owner or insured disposes of his or her ownership interests in a closely held corporation, pursuant to the terms of a buyout or other similar agreement in effect at the time the insurance policy was initially issued; (C) The owner’s spouse dies; (D) The owner divorces his or her spouse; (E) The owner retires from full-time employment; (F) The owner becomes physically or mentally disabled and a physician determines that the disability prevents the owner from maintaining full-time employment; or (G) A final order, judgment, or decree is entered by a court of competent jurisdiction, on the application of a creditor of the owner, adjudicating the owner bankrupt or insolvent, or approving a petition seeking reorganization of the owner or appointing a receiver, trustee, or liquidator to all or a substantial part of the owner’s assets. Copies of the independent evidence required by paragraph (2) of this subsection shall be submitted to the insurer when the provider submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter of attestation from the provider that the copies are true and correct copies of the documents received by the provider. Nothing in this Code section shall prohibit an insurer from exercising its right to contest the validity of any policy. If the provider submits to the insurer a copy of independent evidence provided for in paragraph (2) of this subsection when the provider submits a request to the insurer to effect the transfer of the policy to the provider, the copy is deemed to establish that the settlement contract satisfies the requirements of this subsection. History. — Code 1981, § 33-59-9, enacted by Ga. L. 2005, p. 998, § 1/SB 217; Code 1981, § 33-59-11, as redesignated by Ga. L. 2009, p. 370, § 1/SB 61; Ga. L. 2019, p. 533, § 1-23/HB 99. The 2019 amendment, effective July 1, 2019, substituted ‘‘Code Section 33-59-9’’ for ‘‘Code Section 33-5-9’’ at the end of subsection (f ). Editor’s notes. — Former Code Section 33-59-11 (Code 1981, § 33-59-11, enacted by Ga. L. 2005, p. 998, § 1/SB 217), relating to permissible and impermissible conduct in advertising, was repealed by Ga. L. 2009, p. 370, § 1/SB 61, effective July 1, 2009. 33-59-12. Determining governing law when multiple owners.