[§431C-32] Disclosure to insurer. (a) Without limiting the ability of an insurer from assessing the insurability of a policy applicant and determining whether or not to issue the policy, and 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 subsection (a)(3) of the definition of "life settlement contract" in section 431C-2, a loan provides funds that can be used for a purpose other than paying for the premiums, costs, and expenses associated with obtaining and maintaining the policy and loan, the application shall be rejected as a violation of the prohibited practices in section 431C-41.
(c) If the financing does not violate section 431C-41 in this manner, the insurance carrier: