Delaware General Assembly

House Economic Development/Banking & Insurance 6/29/06

The General Assembly has ended, the current status is the final status.

6/29/06

Stone

Sen. Blevins

AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE RELATING TO WILLS AND TRUSTS.

This legislation would amend the current Viatical Settlement Model Act to include Life Settlements. Section 1 of the Bill renames the Chapter as “The Life Settlement Act”. Section 2 of the Bill provides definitions for the Act. Section 3 of the Bill provides licensing requirements for life insurance producers and life settlement providers subject to the Life Settlement Act. Section 4 of the Bill provides reasons to refuse to issue, suspend, revoke or refuse to renew a license under this Act. Section 5 of the Bill provides requirements for the approval or disapproval of contracts and disclosure forms used in the business. Section 6 of the Bill establishes annual reporting requirements and provides guidelines for the confidentiality of the identity, financial and medical information of an individual who desires to sell their policy. Section 7 of the Bill provides for the examination of a licensee under the Act and establishes the methodology used to complete an examination and provides a hearing and appeal mechanism for reports that are challenged. Section 8 of the Bill provides specific requirements for disclosure documents that are to be presented to any seller in a life settlement transaction. Section 9 of the Bill provides for documentation that would be required to complete a transaction and establishes a right of rescission for the seller and limits contacts with an insured after the transaction is completed. Section 10 of the Bill establishes limited access for the purchase of a life insurance policy if that policy is less than two (2) years old and places requirements to complete that transaction. Section 11 of the Bill provides detailed advertising guidelines for the life settlement industry. Section 12 of the Bill defines a fraudulent life settlement and provides requirements for the reporting and prevention of fraudulent acts. Section 13 of the Bill provides the Commissioner with the authority to issue injunctions and cease and desist orders for violations of this Act. Also, penalties amounts are provided for specific violations. Section 14 of the Bill authorizes the Commissioner to promulgate rules to implement the Act. Section 15 of the Bill defines certain practices as unfair trade practices. Section 16 of the Bill provides for the nonpreemption of any securities laws that might affect life settlements. Section 17 of the Bill adds to the viatical or life settlement contracts to the definition of “securities” in the Securities Act and provides a definition for a “life settlement investment”. Section 18 of the Bill makes it a violation for an insurer to prohibit an otherwise assignable insurance policy. Section 19 of the Bill permits licensees or companies that are currently and lawfully transacting life settlement business in the state to continue to do so pending the application filing and approval process. Section 20 of the Bill provides for an acknowledgement process for a life settlement company who has negotiated life settlements in the past year to operate. Section 21 of the Bill provides an effective date.

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Takes effect upon being signed into law

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