N.Y. Comp. Codes R. & Regs. tit. 11 § 380.6

Current through Register Vol. 46, No. 45, November 2, 2024

Section 380.6 - Filing requirements

(a) Viatical settlement forms filing requirements.

(1) Two specimen copies of every viatical settlement agreement shall be filed with and approved by the superintendent prior to use in New York.

(2) Two specimen copies of every application for a viatical settlement shall be filed with and approved by the superintendent prior to use in New York.

(3) A copy of the information booklet required under section 7807 (b) of the Insurance Law shall be placed on file with the superintendent, prior to its use with any viatical settlement application or agreement in New York.

(4) A copy of the proposal form required by section 380.8(f) of this Part shall be filed with the superintendent.

(b) The company shall enclose with the submission of a viatical settlement agreement form for approval, a pricing memorandum providing a description of the method and assumptions used in determining the value to be paid viators. At the time of submission of a pricing memorandum or at the time of submission of any subsequent supporting documentation, however, a company may request the department to except from disclosure information contained in the pricing memorandum or subsequent supporting documentation in accordance with section 241.6 of this Title. Each page covered by such request should be clearly marked "Confidentiality Requested". Any change in the filed method or assumptions for new transactions must be filed with the superintendent at least 30 days prior to use. The memorandum shall include a description which may use reasonable ranges of the following:

(1) the procedure used to determine viator life expectancy including medical evaluation and use of health care professionals in such evaluation;

(2) the portion of the discount (difference between the death benefit of the life insurance policy or certificate and viatical settlement company payment) due to market value interest rate (current worth of money) and how this interest rate is determined;

(3) the portion of the discount due to agent or broker compensation paid by the viatical settlement company;

(4) the portion of the discount which is the viatical settlement company's operation costs in connection with viatical settlements, including acquisition and maintenance cost, risk charge and profit margin;

(5) the portion of the discount due to other overhead costs;

(6) the effect that policy loans, surrender charges and the net cash surrender value in the insurance plan, if any, have on the pricing determination;

(7) how provision is made in the settlement determination for future insurance plan premiums, dividends or excess amounts, if any;

(8) what provision, if any, is made in the settlement determination for supplemental insurance benefits or riders, such as:

(i) guaranteed insurability options;

(ii) accidental death benefit;

(iii) accelerated death benefit options;

(iv) disability income;

(v) waiver of premium or monthly deduction waiver; or

(vi) children or spouse coverage; and

(9) each variation in any pricing item or assumption that is outside the ranges provided in the general description and the reason therefore, such as type of insurance contract, amount of insurance contract or viator characteristics, and a demonstration that any such variations are not contrary to the requirements of section 7804 (a) or 7808 (c)(1) of the Insurance Law.

(c) Viatical settlement contracts shall include the following provisions:

(1) that the viator may rescind the viatical settlement agreement within 15 days of the receipt of any viatical settlement proceeds;

(2) that if the viator elects the right to rescind the viatical settlement agreement, the company's rights or interest in the life insurance policy or certificate will terminate immediately upon the viator giving notice of such rescission and tendering of such settlement proceeds together with any escrow interest received by the viator. However, the company's right or interest in such policy shall be limited to the amount of settlement proceeds actually received by the viator but not returned by the viator;

(3) that if the viator dies prior to the end of the 15-day period provided by section 7804 (b)(1) of the Insurance Law, it shall be deemed that the viator rescinded the viatical settlement agreement;

(4) that, immediately upon receipt from the viator of documents to effect the transfer of the insurance policy, the viatical settlement company shall pay the proceeds of the settlement to an escrow or trust account managed by a trustee or escrow agent in an insured New York State bank or other bank approved by the superintendent, pending acknowledgement of the transfer by the issuer of the policy;

(5) that there shall be an escrow agreement signed by the viatical settlement company, the viator and the trustee or escrow agent which shall provide that the trustee or escrow agent shall transfer the proceeds due to the viator together with any interest that has accrued thereon, immediately upon receipt of acknowledgement of the transfer by the insurer;

(6) the fee(s) required to be paid by the viator to the viatical settlement company in conjunction with the viatical settlement contract;

(7) that the contract together with the application therefore shall constitute the entire contract between the parties; and

(8) that, if the agreement between the viatical settlement company and the viator provides for the payment of an additional settlement amount to the viator upon the exercise of a guaranteed insurability option by the viator, the contract shall disclose the amount of any such additional settlement and the terms upon which it shall be payable.

(d) If the life insurance policy or certificate to be viaticated provides a guaranteed insurability option, such option may only be exercised for the benefit of a person who has an insurable interest in the life to be insured pursuant to section 3205 of the Insurance Law.

(e) If the life insurance policy or certificate to be viaticated provides for the payment of proceeds on the life of any person covered under the policy or certificate other than the viator, or such policy or certificate provides for the payment of additional benefits in the event of an accidental death, and if the viatical settlement company has agreed to continue any such benefits, the viatical settlement agreement shall provide for the payment of such benefits to the personal representative of the person so insured or to a person having an insurable interest in the person so insured.

(f) If the viatical settlement company has agreed to continue any benefits in accordance with subdivision (e) of this section, the policy or certificate must be endorsed by the insurer with the appropriate designation of irrevocable beneficiary or beneficiaries as permitted by subdivision (e) of this section prior to the transfer of policy or certificate ownership.

(g) The application for the viatical settlement contract shall:

(1) set forth a prominently displayed notice to read as follows:

"Receipt of payment pursuant to a viatical settlement may affect eligibility for public assistance programs such as medical assistance (Medicaid), the family assistance program, supplementary social security income, and AIDS drug assistance programs and may be taxable. Prior to applying for a viatical settlement, policyowners should consult with the appropriate social services agency concerning how receipt will affect the eligibility of the recipient and the recipient's spouse or dependents, and with a qualified tax advisor.";

(2) contain the applicant's consent to the viatical settlement, an acknowledgement by the applicant that he or she has a catastrophic or life-threatening illness, and the applicant's representation that he or she has a full and complete understanding of the viatical settlement;

(3) contain a provision that the proposal which the viatical settlement company will deliver to the applicant before the viatical settlement is signed will not include a detailed description of how the payment amount was determined unless the applicant specifically requests in the application such detailed description which shall also include the assumed life expectancy of the viator if requested by the applicant;

(4) contain the applicant's representation that he or she has a full and complete understanding of the benefits of the life insurance policy, a release, in compliance with applicable statutory requirements, by the applicant of his or her medical records and an acknowledgement that he or she has entered into the viatical settlement freely and voluntarily; and

(5) be duly witnessed and authorized by a person who does not have a financial or beneficial interest, directly or indirectly, in the viatical settlement transaction and shall provide for an acknowledgement of receipt of the information booklet.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 380.6