Chapter 8: Life Settlements

If an association is applying for a life settlement broker license, which of the following requirements must the association meet?

Authorize a natural person to act individually as a broker

If an association is applying for a life settlement broker's license, which of the following requirements must the association meet?

Authorize a natural person to act individually as a broker If a firm or association is applying for a broker's license, they must name and authorize natural persons to act individually as life settlement brokers for the firm.

Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information

Held or transmitted in any form Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information held or transmitted by a covered entity or its business associate in any form or media, whether electronic, paper or oral. This is called protected health information (PHI).

Life expectancy is used in the calculation of which of the following?

Life settlements One of the most important issues in calculating the amount to be paid under a life settlement is the life expectancy of the owner of the policy. The insurance company will have to pay premiums for the duration of the contract, thus adding to the cost of the purchase.

Life Settlement contracts must be approved by which of the following?

The Superintendent of Insurance The Superintendent must approve all life settlement contract forms as well as the final contract.

If a hearing is scheduled for a producer who has violated regulations regarding unfair trade practices, the Superintendent must send a prior notice within how many days of the hearing?

10 days The required notice of hearing is at least 10 days.

The person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract is the

Life settlement broker Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract.

In order to be a licensed life settlement broker a person must complete which of the following requirements ?

Submit Fingerprints Fingerprinting is required and will be used for a criminal history record check so the Superintendent may assess the character and trustworthiness of the applicant prior to licensing.

What is the minimum age for applying for a life settlement broker license?

18 The age requirement to act as a life settlement broker in this state is 18 years old.

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors?

Life expectancy Life Expectancy is an important concept in life settlement contracts. It refers to a calculation based on the average number of months the insured is projected to live due to medical history and mortality factors (an arithmetic mean).

Stranger-orientated life insurance policies are in direct opposition to the principle of

Insurable interest Because the purchaser of a stranger-originated life insurance policy doesn't know the insured, or have any interest in the insured's longevity, STOLI policies violate the principle of insurable interest.

Which of the following best defines the owner of a life settlement contract?

A person who is selling the contract The term "owner" refers to the owner of the policy who may seek to enter into a life settlement contract. This does not include an insurance provider, a qualified institutional buyer, a financing entity, a special purpose entity, or a related provider trust.

The form used to establish the terms for both parties when a person sells his life insurance to a 3rd unrelated person is called a

Life settlement contract When a policyowner decides he no longer needs his insurance coverage and decides to sell his policy to a 3rd party who has no insurable interest, he may establish a Life Settlement Contract with a life settlement provider. The contract establishes all the terms, and must have been approved by the Superintendent.

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

The owner Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.

Which of the following is NOT considered Business of Life Settlement?

A producer discusses the advantages of universal life policy and how the flexible premium allows the owner to control the cash value and death benefit income The term Business of Life Settlement refers to any activity relating to the solicitation and sale of an insurance policy to a third party who has no insurable interest in the insured (i.e. soliciting, negotiating, effectuating, monitoring or tracking life settlement contracts).

An investor buys a life policy on an elderly person in order to sell it for a life settlement this is an example of:

A STOLI Policy Stranger-originated life insurance (STOLI) policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.

Which of the following is true regarding STOLIs in the state of New York?

Direct or indirect participation in STOLIs is prohibited.