SCS/HB 259 - This act regulates "viatical settlements", which are the sale of life insurance policies by people who have life-threatening illnesses.
LICENSES - The Department of Insurance shall license persons and businesses who buy life insurance policies from people who have a catastrophic or life- threatening illness or condition. License fees are $100 per year. Nonresident applicants must file written irrevocable consent that actions against applicant may be commenced by service of process on the Director. Licenses may be refused if any officer or employee of the applicant does not meet the standards set (competent, trustworthy, good business reputation, experience or education). The Director of the Department of Insurance may suspend, revoke or refuse to renew licenses for listed reasons, provided a hearing is first conducted.
CONTRACT APPROVAL - No viatical settlement provider may use a contract unless it is first filed with and approved by the Director, who must act within sixty days. Contracts shall be disapproved if provisions are unreasonable, contrary to the interests of the public, or otherwise misleading or unfair.
ANNUAL STATEMENTS - Licensees must file annual statements by March 1.
EXAMINATIONS - The Director may examine any licensee or applicant. Expenses shall be paid by the licensee or applicant. Data collected shall be confidential. Records of all viatical settlement transactions shall be maintained.
DISCLOSURES - The viatical settlement provider shall disclose certain information to the viator (life insurance policy owner), including possible alternatives, tax consequences, the date that the funds will be available, and the right to rescind within 30 days.
PROCEDURES - The provider buying the life insurance policy must obtain a physician's statement and the knowledgeable consent of the policy owner as documented in a witnessed statement. Medical records that are released must be kept confidential. A refund provision shall be included in the contract. Settlement proceeds shall be handled by an escrow agent. Failure to tender payment by the date disclosed voids the contract.
RULES - The Director may promulgate regulations, establish standards for evaluating settlement contracts, establish licensing requirements and require a bond.
EXISTING PROVIDERS - No existing viatical settlement provider may continue to operate after August 28, 1997, unless it is in compliance with statutes.
TAXES - Proceeds received by the viator shall not be considered Missouri taxable income.
EXEMPTIONS - Exempts variable life insurance, individual and group annuity contracts, credit life insurance and life insurance policies with no individual illustrated death benefits in excess of ten thousand dollars.
ILLUSTRATION FORMS - Insurers shall notify Department whether policy forms are to be marketed with illustration. Potential enrollees of nonterm group life shall be furnished a quotation with enrollment materials. Illustrations used in sales of life insurance policy shall contain certain information. Insurer shall not engage in certain conduct, including misrepresenting policy, or using misleading illustration, the term "vanishing premium" or an illustration that is not "self-supporting". Lists requirements for basic illustrations, which include identification of the following: assumed payments on which the benefits are based, guaranteed death benefits and values available upon surrender, nonguaranteed elements, accumulation value of a policy, policy benefits and values in chart form, and charge required to allow policy charges to be paid using nonguaranteed values. Basic illustrations shall contain a narrative summary as well as a numeric summary of the death benefits and values. Numeric summary page shall also contain statement signed by applicant indicating understanding of nonguaranteed elements.
Supplemental illustrations may be provided as long as it is accompanied by basic illustration, and information is consistent with basic illustration. A copy of a basic illustration used in sale of policy must be submitted to the insurer and provided to the applicant at the time of policy application. If policy issued differs from one applied for, revised basic illustration must be submitted. If no illustration is used, form shall be signed by both parties and basic illustration shall be sent with the policy.
The insurer shall provide annual report to each owner of policy with illustrations, containing certain required information. If no illustration is included, notice stating that owner should require more detailed information shall be included.
ILLUSTRATION ACTUARY - The Board of Directors for each insurer shall appoint one or more illustration actuaries, who shall meet standards set (competent, trustworthy, good business reputation). Duties of illustration actuary shall include informing Director of action taken in another state against the actuary; disclose inconsistencies in current payable scales, nonguaranteed elements, method used to allocated expenses; and file certifications with board and Director or notify both why unable to certify. Another responsible officer shall annually certify that the illustration formats and scales are correct and that the expense allocation method has been disclosed.
RULES - Substantive rulemaking authority under this section and rules promulgated under such authority shall expire on August 31, 1998. If challenged, the agency must demonstrate by a preponderance of the evidence that the rule is valid, authorized by law, not in conflict with any law and is not arbitrary and capricious. This provision shall terminate if legislation amending Section 536.024 has been signed into law prior to effective date of this act.
Portions of this act are similar to the original version of SB 31.
JOAN GUMMELS