Chapter 8 - Life Settlements

A life producer applying for a life settlement broker license may be exempts from the pre-licensing education and examination requirement if the producer has held an active life license for at least how many years?

1 year

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

18

Stranger-originated life insurance (STOLI)

A life insurance arrangement in which a person with no relationship to the insured (a "stranger") purchases a life policy on the insured's life with the intent of selling the policy to an investor and profiting financially when the insured dies. (LI purchased with the sole intent to sell them for life settlements)

What is a Life settlement

Any financial transaction in which the owner of a life insurance policy sells a life insurance policy to a third party for some form of compensation, usually cash.

HIPAA

Health Insurance Portability and Accountability Act: protects individual's health information and sets standards for privacy and security of that information

Material Information

Information that may alter either party's decisions regarding a contract

Superintendent

The head of the state department of insurance

Who must approve a life settlement contract

The superintendent of the insurance

Finder's Fee

a commission paid to someone who connects a buyer and a seller

nonconforming contract

a contract that does not follow state guidelines and provisions

Life settlement broker

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

Rescission

an action that takes back, cancels, or nullifies

Accredited investor

an investor whose net worth is in excess of 1 million, or a corporation with assets in excess of 5 million

Financing Entity

any accredited investor who provides funds for the purchase of one or more life settlement contracts and who has an agreement in writing to do so

In order to be a licensed life settlement broker, what must a person submit

fingerprints

Disclosure

information revealed so someone can make an intelligent and educated decision

Capital

money or other financial assets to operate a business

Who do life settlement brokers represent

the policy owner

Life settlement contract

the terms under which the life settlement provider will pay compensation to the policyowner, in return for the assignment, transfer, sale, or release of any portion of 1.) The death benefit 2.) Policy ownership 3.) Any beneficial interest 4.) Interest in a trust or any other entity that owns the policy

Why are STOLI's a violation

they violate the principle of insurable interest