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
