Xcel Ch.12 Laws and rules

Proceeds of the viatical settlement contract could be subject to the claims of

Creditors

A licensee may only sell, solicit, and negotiate insurance contracts on behalf of the

appointing Insurer

When an insurance company consistently fails to provide reasonable explanations for the denial of a claim, this is called a(n) breach of contract unfair claim settlement fraudulent claim practice unlawful insurance act

unfair claim settlement

Grace Period

30 days , during which a policy remains in force after the premiums is due but not paid. Remember 30 days.

Boycott, Coercion, and Intimidation

illegal practice to commit or coordinate any act or boycott, coercion , or intimidation in order to restrain or monopolize the business of insurance

Pennsylvania law requires that an insurer must notify the Commissioner of a producer appointment termination within 30 days of termination 30 days prior to termination within 15 days of termination 15 days prior to termination

within 30 days of termination

Federal Estate Tax

A tax cost typically associated with death is the Federal Estate Tax

A life insurance policy becomes incontestable after it has been in force for 30 days 6 months 2 years 3 years

2 years

When soliciting insurance , a producer CANNOT

emphasize Guaranty Association benefits

A producer that willfully violates any provision of Pennsylvania Insurance law may be imposed to a maximum penalty set by the Commissioner at $1,500 per violation $3,000 per violation $5,000 per violation one year imprisonment

$5,000 per violation

Charging a client less premium than what is stated in their insurance policy is called

a rebate

Solvency

ability to meet all financial obligations however if the life insurance company is financially insolvent if it does not have its minimum reserves, referred to as "net value", plus 50% company capital on hand. When this happens the company is prohibited from issuing new policies until funds equal liabilities.

For Pennsylvania Insurance Code violations, the Commissioner may assess a(n) prison sentence administrative penalty insurer appointment termination monetary award for pain and suffering

administrative code

The free look period provided in a life insurance policy is usually 10 days 31 days 45 days 60 days

10 days

False Financial Statements

It is illegal to publish false statements regarding an insurer's financial condition with the intent to deceive.

What is the required action to be taken by a Pennsylvania licensee before operating under an assumed business name?

Notify Commissioner

Exemption from creditors

Proceeds from life insurance policy are protected from any claims by a editor of the insured as long as there is a named beneficiary.

Assumed names

Produce must report to the commissioner if they will be conducting business under an assumed name

Which of the following is a person who negotiates an insurance contract on behalf of an insurer?

Producer

Buyer's Guide

enables applicants to compare different life insurance policies and help them choose which policy applied for

A producer who sells insurance in Pennsylvania but resides in another state is called a

nonresident producer

Violations of US Code Title 18 section 1033, may result in 1) Fine and/or imprisonment 2) Cease and Desist Order 3) Suspension of Producer's license 4) Loss of company appointments

1

A Pennsylvania temporary producer license may be issued for a period not to exceed 30 days 45 days 90 days 180 days

180 days

Accelerated Death Benefits

In PA, payment on an accelerated death benefit may not be less than 25% of the total death benefit

Insurance Fraud Regulation

It is illegal to commit the act of insurance fraud, it is defined as any intentional act occurring in the course of insurance business that attempts to deceive or misrepresent a material fact. Any person who, in the absence of fraud or bad faith, reports information regarding an act of insurance fraud will be given immunity. All life and/or health insurers must contribute annually to the PA Insurance Fraud Prevention Trust Fund

A life insurance producer licensed in the Commonwealth of Pennsylvania is authorized to 1) Approve the payments of a claim 2) Reinstate an insurance contract after the expiration date 3) Solicit, receive and forward applications to the insurer 4) Replace a policy without notifying the insurer

Solicit, receive and forward applications to the insurer

Holding premium funds for timely submission to the insurer is an example of

acting fiduciary capacity

Domestic Insurance company

company that resides and is incorporated under the laws of the state in which its home office is located A company chartered in PA would be a domestic company in PA

haring 50% of a producer's commission with the insured is an example of

illegal inducement

Producers have several duties if a replacement of a life insurance policy is involved. These include:

- Determine if the transaction will involve the replacement of existing life insurance -Obtaining a signed statement from applicant understands a replacement is taking place -Secure a list of all existing policies being replaced - Provide the applicant a Notice Regarding Replacement of Life Insurance signed by both producer and applicant -Provide comparison forms when requested by applicant -Leave copies of all sales proposals

In Pennsylvania, what's the requirement for a minor to receive proceeds from a death benefit? 1) Has to be at least 15 years old 2) Must live in the same state as insured 3) The Commissioner must approve 4) A guardian must be appointed

A guardian must be appointed

Personally Indentifiable Information (PII) is a term that includes any of the following:

-Information form a consumer report -account balance information and payment history -Information a consumer provides to a license in an insurance application -Information the license collects through an internet cookie (an information-collecting device form a web server)

Which of the following is required to maintain a Producer's license in Pennsylvania? 1) Company officer or director, whose activities are clerical or administrative 2) A salaried full-time employee, who does not sell or solicit insurance 3) Home office underwriter 4) Field underwriter, who solicits insurance and earns a commission

Field underwriter, who solicits insurance and earns a commission

For licensing purposes, if an applicant has a home or office location in the state of Pennsylvania, this would be consistent with which of the following? Territory Delivery state Home state Non-resident requirement

Home State

Commission may be shared by

Licensed and appropriate producer

Renewal

Licenses are valid for two years, and may be renewed every two years with a fee, renewal application, and proof of completing continuing education credits during the two-year period. A lapse license may be reinstated within 2 month of the renewal date.

Free Look Period

Life insurance policies must provide a minimum free-look period of 10 days upon policy delivery. This allows the policy owner time to decide whether or not to keep the policy. If policy owner decides not to keep the policy within those 10 days, it is a free refund.

What is required before an insurance producer can act as a representative of an insurer? Producer needs to be certified by that insurer Producer needs to establish a sales quota Producer needs to be appointed by that insurer Producer needs to be gainfully employed by that insurer

Producer needs to be appointed by that insurer

Why are Insurance companies are subjected to the FCRA?

They use consumer credit reports during underwrite and risk sections

Producer

an individual appointed by an insurance company that represents the company and presents policies on its behalf is called a producer -Usually is the major personal contact with the insured -an insurance producer can receive commision (Know) A life insurance producer in PA is authorized to solicit, receive and forward applications to the insurer

Group Life Insurance

in the event of employment termination, a person covered by a group policy also has the right to convert such coverage to an individual policy within the conversion period (31 days). without proving insurability. If this right exercised, the employee is responsible for the payment of premium

A producer's license CANNOT be revoked without ?

a hearing given to producer

Policy Replacement is a transaction in which a new policy or contract is to be purchased and the producer is aware that an existing policy or contract has been, or will be:

- Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated - Converted to reduce paid-up insurance , continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values -Modified to cause reduction in benefits or length of policy term -Reissued with a reduction in cash value -Refusing to pay a claim when it is clear that the insurer is liable to fulfill its contractual promise -Used in a financial purchase

Insurers are required to inform all producers soliciting on their behalf of the duties of a producer in regards to replacement. These include:

- Require its producers collect a signed statement by the applicant that he/she realizes a replacement is taking place -Require its producers provide a Notice to the Applicant when replacement is involved - An insurer will provide Comparative information Forms when necessary and must notify existing insurer about the proposed replacement -Insurers must maintain files of client records and policy replacement for three years after the relationship - Insurer must give new policyowner a free-look period of 20 days after delivery

Commissioner will impose the following penalties on a person found to be in violation after the hearing, or failure of person to appear at eh hearing:

-Deny, suspend, refuse to renew, or revoke the persons producer license -Asses civil penalty up to 5k each violation -Issue a cease and desist order

Prohibited acts (the actions that will cause the producer to face disciplinary action) :

-Violating an insurance law, committing a felony, having been convicted or pleaded guilty, using dishonest practice, cheating on state license exam, failing to pay state income tax, court ordered child support, being designated as beneficary under a policy sold to a non-relative, failing to communicate with the insurance department when required, embezzlement , or committing fraud or forgery

Policy Loans

A maximum fixed interest rate charged by the insurers is 8% in PA. A policy owner cannot barrow against the cash value unless policy has been in force for 3 full years. If policy owner fails to repay loan, the policy won't be voided. Company has the right to deduct from the death benefit any outstanding loan balances when an insured dies

Producer as representative of insurer

A producer must secure an appointment with an insurer before soliciting insurance applications for that insurer. Only producers appointed by the insurer may act on behalf of the insurer.A producer authority to bind an insurer to an insurance contact may be granted in the producers appointment with the insurance company . Producers are not required to be appointed as an insurers representative if they function as broken

A Temporary license may be issued without state examination to all of the following EXCEPT Producer's spouse Executor of Producer's estate Employee of the Producer A prospective Producer who is currently enrolled in a pre-licensing insurance class

A prospective Producer who is currently enrolled in a pre-licensing insurance class

Accelerated Benefit

Allows someone that a physician certifies as terminally ill to access the death benefit. The amount of benefit received will be tax free.

Admitted Insurer

An insurance company that has qualified and received a Certificate of Authority from the Department of Insurance to transact insurance in the state. Also called authorized insurance company

According to Pennsylvania law, which of the following is NOT considered to be personally identifiable financial information? 1) Information obtained from an insurance application 2) Consumer report information 3) Account balance information 4) Blind trust data that does not include names and addresses

Blind trust data that does not include names and addresses

Which of following provisions protects a Pennsylvania policyowner from an innocent mistake made on the application over 2 years ago? Entire contract provision Nonforfeiture provision Spendthrift provision Incontestability provision

Incontestability provision

When a producer offers something of value in return for the purchase of an insurance policy, which prohibited sales practice has been committed? Defamation Inducement Twisting Misrepresentation

Inducement

Personally identifiable information information does not include:

Information such as blind data that does not include names and addresses A list of names and addresses of customers of an entity that is not a financial institution Health information

In Pennsylvania, completion of continuing education is required upon license renewal for which of the following? 1) Attorney -at-law 2) Full time active duty military 3) Licensed individuals qualified in major lines of insurance 4) Non Resident producers

Licensed individuals qualified in major lines of insurance

Backdating

Policies can't be backdated more than 6 months from the issue date. Point of this action is to make the policy more effective at an earlier date to persevere slightly lower premium at that reduced age

What is the purpose of the Pennsylvania Life and Health Insurance Guaranty Association? 1) Assist an applicant choose the best insurer 2) Assist an applicant choose the right amount of coverage 3) Provide each policyowner a buyer's guide and policy summary 4) Provide policyowner protection if an insurer becomes insolvent

Provide policyowner protection if an insurer becomes insolvent

Entire Contract

The provision which states that both the policy and a copy of the application form the contract between the policyowner and the insurer

AIDS/HIV testing

Underwriting an individual policy, insurers may require proposed insured to undergo an HIV test, but only conjunction with other medical tests. The basis for requiring an HIV test cannot be the proposed insure's sexual orientation. The insurer has to obtain written consent from the proposed insured in order to conduct the HIV testing

Agreements made by terminally ill persons to sell their life insurance policies at a discount in order to pay medical expenses are called Repurchase agreements Viatical settlements Nonforfeitures Living wills

Viatical Settlements

1035 Exchange

When an existing life insurance policy is assigned to another insurer for a new contract, the transaction may be treated for tax purposes as a Section 1035 exchange. Policy exchanges that qualify as a 1035 exchange are not taxable.

Viatical settlement broker

advertise the availability of viatical settlements, introduce viators to the settlement providers, and charge fee for their services Need to be licensed before conducting any viatical transactions Factors of a buyer or broker will use include the value of the policy and payout, premium payments requirements, prognosis of Viator (policyowner), chancres of Viator living longer than expected and any special payout terms

Stranger-Originated Life Insurance (STOLI)

an agreement initiated at or prior to the issuance of a policy that includes: the purchase of a policy benefiting a person, who at time of issue, has no insurable interest in the person to be insured the transfer at any time of the legal ownership/benefits, including assumption or forgiveness of a loan to fund premiums

cease and desist order

commissioner believes a producer or entity has broken an insurance law, commissioner has the authority to issue a cease and desist order at a hearing. Any person or entity found to be in violation of an insurance law will be notified by the insurance department. The person will be notified and a hearing date will be atleast 10 days later

Policy Summary

contains specific information on the provisions, benefits, and coverage of the policy applied for

When an applicant for a producer's license has a principal place of residence or business location in Pennsylvania, for licensing purposes the State of Pennsylvania is known as the territory district state registry home state

home state

Defamation

illegal practice to make any public statement of advertisement to contains false information or unsubstantiated criticism about an insurance company

Misrepresentation

illegal practice to mislead or misrepresent any fact about an insurance policy - such as policy terms, benefits, value , cost , effective date, or existence of a contract of insurance

certification authority

no insurance company shall conduct any business of insurance in this state with out a ______________________________ issued by the department of insurance

commisioner

primary duty of the Insurance Commissioner is to see that laws are properly executed and enforced. He or she is appointed insurance by the govern to a four year term

Pennsylvania Life and Health Guaranty Association provides:

$300,000 in life insurance death benefits $100,000 in cash surrender value $300,000 in health insurance claims $3000,00 in present value annuity benefit

Unfair Claims Settlement Practices include

-Intentionally misrepresenting pertinent policy provisions or benefits about a policy or claimants -Denying a claim without referencing the portion of the policy that references why the submitted claim is not covered by the policy -Failing to respond to claims or provide claim forms within the required amount -Failing to begin investigation into a claim within the required number of days of receiving a notice claim -Refusing to pay a claim when it is clear that the insurer is liable to fulfill its contractual promises -Persuading insured to file a lawsuit, or settle through arbitration when such action would result in a significantly lower benefit than that provided by the insurance policy -Attempting to delay investigation or claims payment unnecessarily -Every insurer, upon receiving notification of a claim, must acknowledge receipt of the notice within 10 days

PA residents desire any type of insurance license must:

-be at least 18 -Reissued with any reduction in cash value -Compete a 24 hour prelicensing course in the pertinent line of authority -Pass the PA state licensing exam (after passing, a license application must be submitted to the Insurance Department within 1 year) -Not hace cometed any act that is ground for denial, suspension, or revocation of a license -Submit appropriate forms, application, fingerprint, and fees

Foreign Insurance Company

A company whose home office located in another state. Its considered to be a foreign company in all states except its home state Ex: A company chartered in Texas would be a foreign company in PA.

Non-admitted Insurer

An insurance company that has been denied or not yet applied for a certificate of authority and may not sell insurance in this state Also called an unauthorized insurance company

Which of the following constitutes grounds for suspending a Pennsylvania producer's license? Summary Action conviction Felony conviction Failure to comply with underwriting guidelines Failure to maintain insurance transaction records for at least 10 years

Felony Conviction

Which of the following is a violation of Pennsylvania insurance law? Failure to pay insurer appointment fees Offering insurance contracts through unlicensed entities Charging policy fees Failing to notify the Commissioner of any administrative action taken against the licensee within 10 days of the final disposition of the matter

Offering insurance contracts through unlicensed entities

In Pennsylvania, a Producer may have his/her license revoked for which of the following acts? 1) Loss of insurer appointment 2) Failing to renew license on a timely basis 3) Sharing commissions with another licensed Producer 4) Signing a prospect's name without their knowledge or presence

Signing a prospect's name without their knowledge or presence

policy forms

State insurance commissioners have the authority to approve or disapprove new policy forms before the contracts are sold to the public. Commissioner has 30 days to approve or disapprove policy form

Examination of books and records

commissioner may examine the business affairs, books , records, documents. and computer files of any producer to determine the producer's financial condition and whether the producer is abiding by insurance laws. The commissioner must conduct a financial examination of each insurer licensed in Pennsylvaina at least once every five years.

A life insurance illustration showing future premiums being paid out of nonguaranteed values must disclose that These policy premiums will vanish The policy guarantees payment of these premiums The policyowner forfeits the option of paying these premiums from other The policyowner may need to resume premium payments depending on actual results

e policyowner may need to resume premium payments depending on actual results

Representation

if the application is made part of the policy , the policy shall contain a provision that the statements in the application , in the absence of fraud , are considered representation

Rebating

illegal to offer a premium rebate or a special advantage of any kind to consumers as an inducement to purchase contract of insurance

When a producer offers something of value in return for the purchase of an insurance policy, which prohibited sales practice has been committed? Defamation Inducement Twisting Misrepresentation

inducement

Temporary License

issued in cases where a producer has become disabled or dies, requiring a replacement to service the producers business . Temporary producer can also be appointed when the producer is called into military duty. -(Know) a temporary license is valid for a maximum of 180 days

Insurable Interest

person acquiring the contract (the applicant) must be subject to loss upon the death, disability, or illness of the insured. This must occur at a time the application is taken, but not required afterwards A married person Jas this in the life of her spouse. This interest may exist in absence of an economic interest wen the individuals are married

Incontestability

provision that the policy terms shall be incontestable after it has been in force for a period of two years from the date of issue (unless the purpose for taking out coverage of fraud)

Nonresident

someone who is a nonresident (from a different state) can apply for a nonresident license in PA, as long as both states have a RECIPROCAL AGREEMENT.

A person that is eligible for a temporary license include producer's:

surviving spouse, court-appointed personal representative, or the business owner/partner/employee

Minors

to receive proceeds from a death benefit, a minor must have an appointed guardian

An Accelerated Death Benefit in Pennsylvania must be at least what percentage of the total death benefit?

25%

Which of the following is the Pennsylvania Insurance Department NOT responsible for? Regulations Producers Shareholders Reinsurers

Shareholder

Powers held by the Commissioner

-Investigates reports of unfair and deceptive practices -Issue, revoke, or suspend license and collecting fees -Regulate insurers for solvency, approve policy forms, and regulate premium rates -appointing examiners to examine insurers and producers for compliance -Issue cease and desist orders to insurers, adjusters, and producers -Conduct hearings -Report Illegal activities

A resident producer license requires each of the following EXCEPT Applicant receiving a passing score on state exam Satisfied prelicensing education requirements Fingerprint submission Insurer appointment

Insurer appointment

Address Change

Licensees must report a change of address to the insurance Department within 30 days

Producer as representative of consumer

Producer acting on behalf of the consumer must establish a written agreement with the consumer prior to representing or acting on their behalf. The agreement must identify the services to be provided with full and complete disclosure of any fee consumer will have to pay

Continuing Education

Producer must complete 24 hours of continuing education every two years in order to renew their licenses. In PA the commissioner is responsible for CE courses

In Pennsylvania, an insurance producer license can be denied for failure to pay each of the following. EXCEPT? State income tax Property tax Child support License fee

Property Tax

Life insurance may make an immediate benefit payment before the insured dies in which transaction?

Viatical Settlement

Misappropriation of funds

illegal practice to improperly withhold , misappropriate, or convert money or property received in the course of doing insurance business. Procedures who transact insurance in order to convert contracts for their own use are guilty of theft and subject to punishment

Illegal Inducement

it is illegal to offer any of the following to buy insurance: stocks, bonds, securities, dividends, items of value, or special favors.

Unfair Discrimination

illegal practice to unfairly discriminate against a person in any way on an insurance-related matter. Ex. Charging a different rate for someone in the same risk category. Fair discrimination is necessary for the insurance life policies, which is based on mortality

Rates

Insurance companies are required by law to charge premium rates that are not excessive, inadequate, or unfairly discriminatory. Insurers must file their rates with the Insurance Department. Filing is subject to a 30-day waiting period before it becomes effective

Cancellation of appointment

Insurer is responsible for a producer's termination of appointment to the commissioner . PA law requires that an insurer must notify the commissioner producer appointment termination within 30 days of termination

Twisting

Involves the deceptive act of inducing a policy owner lapse, forfeit, or surrender a life insurance policy for the purpose of replacing it with another policy with a different company. This action is not the insureds best interest

A producer who sells insurance on the premise of a financial institution , such as a bank , must provide the following disclosures at or before a consumer submits an application insurance:

- The contract is not a deposit -The contract is not insured by the Federal Deposit Insurance Corporation (FDIC) or any other agency or instrumentality of the Federal Government -The contract is not guaranteed by the financial institution or an affiliated insured depository institution -The contract is subjected to investment risk, including potential loss of principal, which appropriate

Insurance Commissioner may place on probation, suspension, revocation, refuse to renew, or deny a license to any person who has:(13)

-Provided incorrect, misleading, incomplete or untrue information in the license application -Violating any insurance laws, regulation, subpoena, or orders from the Insurance Commissioner - Obtaining to obtain a license through fraud or misrepresentation -Intentionally misrepresent the terms of life insurance contract -Been convicted of a felony -Committed any insurance unfair trade practice -Using fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in this or any other sales -Having an insurance licenses dined or suspended, or revoked by another state -Forging a name to an insurance document or application -Cheating on an insurance license examination -Knowingly accepting insurance business from an unlicensed individual -Failing to comply with a court order imposing child support -Failing to pay state income tax

Producers must complete a total of ___ Continuing Education credits for each two-year licensing period.

24

Alien Insurance Company

An insurance company incorporated outside the country Ex: A company chartered in Canada would be an Alien country to PA.

personal liability

Producer of an insurer can be personally liable for committing acts which are prohibited in the agency contract

Viatical settlement brokers send packets of information to potential viatees. These information packets normally include existing policy terms and which of the following? 1) Viator's medical prognosis 2) Proceeds of the settlement to be placed in a trust account 3) Executed absolute assignment 4) Brochure describing the process of viatical settlements

Viator's medical prognosis

false advertising

illegal practice to falsely advertise insurance products or services in anyway . Includes making false statements about the financial conditioning of an insurer

Fair Credit Reporting Act

A federal law that established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used. -Regulates the use and disclosure of consumer credit information. -Used for credit reporting agencies such as Experian, Equifax, and TransUnion these companies are required by law to provide information about a consumer stored in agency's files. -Agencies cannot store adverse information about a consumer for longer than a set period of time Ex: Information about late payments and final judgements can only stay on the credit report four up to SEVEN years, bankruptcies - TEN years , and tax liens - SEVEN years from the date of the payment. (Know) The consumer who was investigated must be advised that credit, insurance, or employment was denied because of an unfavorable report.

Illustrations

Chart, graphs, and numerical data that depict the non-guaranteed elements of policy over time. Non- guaranteed elements are premiums, benefits, values, credits, or charges under a policy of life insurance that are not guaranteed or determined when the policy is issued Defined as a life insurance illustration showing future premiums being paid out of nongauranteed values most disclose that the policyowner may need to resume premium payments depending on actual results

Fraud and False Statements (Section 1033)

Makes it illegal to lie, falsify, or conceal information (orally or in writing) from a federal official. Any person engaged in interstate insurance business who engages intentional unfair or deceptive insurance practices, or overvalues an insurance product in a financial report or document presented to a regulatory official , will be in violations include, but are not limited to: embezzling money from an insurance company, misappropriating insurance premiums, and writing threatening letters to insurance offices. The punishment for violation is a fine up to $50,000, imprisionment up to 15 years, and/or license revocation Individual convicted of a felony involving dishonesty may engage in the business of insurance ONLY after receiving written consent from the state insurance regulatory agency and a 1033 waiver

Solicitation and sales presentations

Producer must not present a life insurance policy as an investment tool or profit-sharing plan, or dividends as anything other than the equitable distribution of the insures's surplus or return of overpaid premium. Producers must not state that dividends are guaranteed. Producers must provide applicants with the approved NAIC Buyer's Guide. Producers must also provide a Policy Summary to applicants

Fiduciary Responsibility

Producers have responsibility for all the funds collected from clients . Producers must not mingle these funds with their own personal funds. However, producers are not required by law to open separate bank account for such funds Producer must remit collected premiums to insurers on a timely basis Producer that spends insurance premiums received from the consumer for his own personal use , has committed embezzlement

Reporting of actions

Producers must report any bankruptcy, felony, or any other administrative actions that occur in Pennsylvania or another jurisdiction to the insurance department within 30 days

A transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered is called Nonforfeiture Replacement Reinvestment Rollover

Replacement

Which of the following statements about the contestability of a life insurance policy is true? 1) The policy cannot be contested by the insurer once it is paid for and issued 2) The policy can be contested by the insurer only during the first two years of the contract 3) The policy can never be contested by the insurer 4) The policy can always be contested by the insure

The policy can be contested by the insurer only during the first two years of the contract

Delivery Receipt Requirement

When an individual policy or annuity is delivered to the policyowner by hand , a delivery receipt must be used. Must be signed by both policy owner and producer and a copy given to the policy owner and insurer.

Viatical Settlement

allows someone with a terminal illness to sell their existing life insurance policy to a third party for a percentage of the face value. The new owner continues to make the premium payments and will eventually collect the entire death benefit. Proceeds of the viatical settlement contract should be subject to claims of creditors. Note: original policy owner is called Viator new third party owner is called Viatical or sometimes the Viatee