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