maine life insurance LAW
solicitation and cost disclosure
-buyers guide -policy summary -policy illustrations
replacement is
... not unlawful as long as replacement rules are followed
Except for Industrial life insurance, all life insurance policies sold in this state must contain a ____ day grace period, during which time the policy must continue in force:
30 day
industrial life insurance policy grace period
4 weeks or 28 days
life insurance incontestable
AFTER they have been in force for TWO YEARS
rules regarding replacement apply when
Applicant uses his existing policy to make a financed purchase of his new one
in this state
Dividends are guaranteed to be paid
variable life
Life insurance policy illustration requirements do not apply
things for settlement producer to obtain before entering into settlement contract with viator
WRITTEN STATEMENT from LICENSED physician that victor is of SOUND MIND and under no INFLUENCE to ENTER IN settlement contract -WITNESSED DOCUMENTS representing viator has full/complete understanding of the settlement contract.. entering freely and voluntarily -DOCUMENT in which VIATOR CONSENTS to the RELEASE of his MEDICAL RECORDS to the settlement provider
settlement provider
a person other than the viator that enters into a settlement contract
supplemental illustrations
are available at the request of the applicant
policy illustrations
basic illustrations must include: NUMERIC SUMMARY of death benefits, cash values and contract premium for policy years (5,10,20 and at age 70) also must include statement signed by the applicant and the producer stating that
variable annuity recommendations
compliance w/ FINRA required requires insurers and producers maintain records for making recommendation for at least 3 YEARS
buyers guide
contains information that helps applicant decide how much life insurance to buy determine what type of policy is needed and compares the costs of similar policies
rules regarding replacement DO NOT APPLY when replacing
credit life group life or group annuities execising contractual change or conversion privilege to existing insurer -new policy replaces policy that was issued binding or conditional receipt by same insurer -immediate annuities are purchased w/proceed form existing contract -when buying life insurance for first time -or buying new policy but also keeping their existing policy
producer's must obtain(or make reasonable effort to)
financial status tax status investment objectives other relevant information
what if no illustration used?
if not illustration used by producer, or if policy is applied for other than illustrated..... applicant MUST SIGN A FORM acknowledging that an ILLUSTRATION CONFORMING to the policy is issued will be provided no later than AT THE TIME OF POLICY DELIVERY
considered misrepresentation
if you fail to provide: buyer's guide, preliminary statement of policy cost or policy summary
**at least 5 years**
insurer must be able to produce copies of required replacement documents including signed statement for at least 5 yrs
replacement transactions
is one which a new policy is to be purchased producer knows that existing policy will be: -lapsed, surrendered, terminated -converted to REDUCED PAID-UP or continued as EXTENDED TERM -reissued w/reduction in cash value -used in financial purchase(premiums paid for new policy are paid by funds borrowed by existing policy)
upon death of viator
life insurance policy proceeds are payable to settment provider
policy provisions
maine has a 10 DAY FREE LOOK, starting @ policy delivery on INDIVIDUAL LIFE INSURANCE all life policies have 30 DAY GRACE PERIOD
AIDS testing requirements
must be voluntary only undertaken w/patient's knowledge must give their written informed consent before test can happen if questions are designed to establish the sexual orientation of the applicant, then no questions may be used on app insurers must notify applicant of available post-test counseling if HIV positive HIV positive tests are reported to MIB reported in non-specific manner as GENERIC BLOOD DISORDERS
settlement contract provisions
must contain provision that viator has the right to RESCIND THE CONTRACT before or earlier of 30 DAYS AFTER THE DATE IT WAS SIGNED or 15 days AFTER date of PAYMENT was received from the settlement provider if RESCISSIONS happens, only effective if victor REPAYS ALL PROCEEDS AND PREMIUMS
references to policy dividends
must include a statement that DIVIDENDS are not guaranteed
things producer has to do before accepting premium
must provide a BUYER'S GUIDE & preliminary statement of policy cost BEFORE accepting the initial premium
changes in the application
no alterations w/o applicants written consent except insertions may be made by insurer for ADMINISTRATIVE PURPOSES ONLY
viator
person who SELLS his life insurance DEATH BENFITS to a settlement provider for an AMOUNT THAT IS LESS THAN FACE AMOUNT of the policy
settlement producer
person who has a LIFE INSURANCE PRODUCER'S LICENSE who acts in any manner in the soliciting of a settlement on behalf of a viator FOR A FEE
annuity recomendations
producer must have reasonable grounds that RECOMMENDATION IS SUITABLE for the customer on the BASIS of their INVESTMENTS, OTHER INSURANCE, FINANCIAL SITUATION AND NEED
if customer refuses to provide requested info
producers have no obligation if they refuse if they enter into transaction not based on recommendation of the producer or fail to provide accurate info: producer also has no obligation
if replacement is involved
replacing producer must be PRESENT and READ NOTICE REGARDING REPLACEMENT to applicant NO LATER THAN THE TIME OF TAKING THE APPLICATION NOTICE must then be SIGNED BY BOTH(applicant & producer) then left w/applicant w/copies of all sales materials used
things producer has to do before or at time of policy DELIVERY
same things as before accepting premium & must also provide a POLICY SUMMARY
preliminary statement of policy cost
statement, similar to buyer's guide but less detailed designed to help applicant compare cost of different life insurances and determine how much coverage to buy
*when replacement of life insurance happens*
suicide exclusion starts over incontestability clause starts over premium may be higher(because older now) insurer may reject app for underwriting reasons new policy may not develop any cash value
amounts received in viatical settlements
tax free if viator meets definition of TERMINALLY ILL -expected to die WITHIN 24 MONTHS
what happens if claim arises during grace period?
the amount of the premium due, together with interest, MAY BE DEDUCTED FROM THE POLICY PROCEEDS
on participating life insurance policies, what must the insurer do annually w/any surplus? (profits)
they must annually APPORTION(divide) any divisible surplus(profits) by end of 3RD POLICY YEAR may elect to have dividends paid in cash, or applied to any other dividend option dividends are NOT guaranteed
**twisting**
using incomplete comparisons in order to replace existing policy
policy illustrations requirement apply to ALL GROUP AND INDIVIDUAL LIFE EXCEPT:
variable life individual and group annuity contracts credit life life policies w/no illustrated death benefits on any individual exceeding $10,000
change of policy ownership under viator settlement
viator changes policy ownership to settlement provider settlement provider names themselves as beneficiary and assumes the responsibility of paying future premiums
copy of the illustration
when used by a producer must be submitted to the insurer and provided to the applicant AT THE TIME OF POLICY APPLICATION
viatical settlements
written agreement between viator and settlement provider establishing the term of which COMPENSATIONS will be paid IN RETURN for the viator's ASSIGNMENT of his LIFE INSURANCE DEATH BENEFITS
policy summary
written statement describing the elements of a life insurance policy has name, address of producer & insured has name of policy and each rider tells annual premium, cash surrender values, guaranteed death benefits and policy loan interest rates also has life insurance cost indexes, including a surrender cost index and a net payment cost index
with illustrations, can things change?
yes, even if you receive the copy of the illustration the insured has to understand that ANY NON-GURANTEED ELEMENTS ILLUSTRATED ARE SUBJECT TO CHANGE
can settlement provider contact viator (insured) after?
yes, every 3 month to see how health is if viator's life expectancy is longer than 1 yr if life expectancy is less than one yr: no more than once per month