(a)  It is unlawful for any person to:

(1)  Enter into a life settlement contract if such person knows or reasonably should have known that the life insurance policy was obtained by means of a false, deceptive, or misleading application for such policy;

(2)  Engage in any transaction, practice, or course of business if such person knows or reasonably should have known that the intent was to avoid the notice requirements of this chapter;

(3)  Engage in any fraudulent act or practice in connection with any transaction relating to any settlement involving an owner who is a resident of this state;

(4)  Issue, solicit, market, or otherwise promote the purchase of an insurance policy for the purpose of or with an emphasis on settling the policy;

(5)  Enter into a premium finance agreement with any person or agency, or any person affiliated with such person or agency, pursuant to which such person shall receive any proceeds, fees, or other consideration, directly or indirectly, from the policy or owner of the policy or any other person with respect to the premium finance agreement or any settlement contract or other transaction related to such policy that are in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums pursuant to the premium finance agreement or subsequent sale of such agreement; provided, further, that any payments, charges, fees, or other amounts in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums paid under the premium finance agreement shall be remitted to the original owner of the policy or to his or her estate if he or she is not living at the time of the determination of the overpayment;

(6)  With respect to any settlement contract or insurance policy and a broker, knowingly solicit an offer from, effectuate a life settlement contract with, or make a sale to any provider, financing entity, or related provider trust that is controlling, controlled by, or under common control with such broker unless such relationship has been disclosed to the owner;

(7)  With respect to any life settlement contract or insurance policy and a provider, knowingly enter into a life settlement contract with an owner, if, in connection with such life settlement contract, anything of value will be paid to a broker that is controlling, controlled by, or under common control with such provider or the financing entity or related provider trust that is involved in such settlement contract unless such relationship has been disclosed to the owner;

(8)  With respect to a provider, enter into a life settlement contract unless the life settlement promotional, advertising, and marketing materials, as may be prescribed by regulation, have been filed with the commissioner. In no event shall any marketing materials expressly reference that the insurance is “free” for any period of time. The inclusion of any reference in the marketing materials that would cause an owner to reasonably believe that the insurance is free for any period of time shall be considered a violation of this chapter; or

(9)  With respect to any life insurance producer, insurance company, broker, or provider make any statement or representation to the applicant or policyholder in connection with the sale or financing of a life insurance policy to the effect that the insurance is free or without cost to the policyholder for any period of time unless provided in the policy.

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Terms Used In Rhode Island General Laws 27-72-13

  • Broker: means a person who, on behalf of an owner and for a fee, commission or other valuable consideration, offers or attempts to negotiate life settlement contracts between an owner and provider. See Rhode Island General Laws 27-72-2
  • Commissioner: means the director of the department of business regulation or his or her designee. See Rhode Island General Laws 27-72-2
  • Contract: A legal written agreement that becomes binding when signed.
  • Financing entity: means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a provider, credit enhancer, or any entity that has a direct ownership in a policy or certificate that is the subject of a life settlement contract, but:

    (i)  Whose principal activity related to the transaction is providing funds to effect the life settlement contract or purchase of one or more policies; and

    (ii)  Who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts. See Rhode Island General Laws 27-72-2

  • Fraudulent life settlement act: includes :

    (i)  Acts or omissions committed by any person who, knowingly and with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits, or permits its employees or its agents to engage in acts including, but not limited to:

    (A)  Presenting, causing to be presented, or preparing with knowledge and belief that it will be presented to or by a provider, premium finance lender, broker, insurer, insurance producer, or any other person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to one or more of the following:

    (I)  An application for the issuance of a life settlement contract or insurance policy;

    (II)  The underwriting of a life settlement contract or insurance policy;

    (III)  A claim for payment or benefit pursuant to a life settlement contract or insurance policy;

    (IV)  Premiums paid on an insurance policy;

    (V)  Payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or insurance policy;

    (VI)  The reinstatement or conversion of an insurance policy;

    (VII)  In the solicitation, offer to enter into, or effectuation of a life settlement contract, or insurance policy;

    (VIII)  The issuance of written evidence of a life settlement contract or insurance;

    (IX)  Any application for or the existence of or any payments related to a loan secured directly or indirectly by any interest in a life insurance policy; or

    (X)  Entering into any practice or plan that involves stranger originated life insurance (STOLI). See Rhode Island General Laws 27-72-2

  • Life insurance producer: means any person licensed in this state as a resident or nonresident insurance producer who has received qualification or authority for life insurance coverage or a life line of coverage pursuant to chapter 2. See Rhode Island General Laws 27-72-2
  • Life settlement contract: means a written agreement entered into between a provider and an owner, establishing the terms under which compensation or any thing of value will be paid, which compensation or thing of value is less than the expected death benefit of the insurance policy or certificate, in return for the owner's assignment, transfer, sale, devise, or bequest of the death benefit or any portion of an insurance policy or certificate of insurance for compensation; provided, however, that the minimum value for a life settlement contract shall be greater than a cash surrender value or accelerated death benefit available at the time of an application for a life settlement contract. See Rhode Island General Laws 27-72-2
  • Owner: means the owner of a life insurance policy or a certificate holder under a group policy, with or without a terminal illness, who enters or seeks to enter into a life settlement contract. See Rhode Island General Laws 27-72-2
  • Person: means any natural person or legal entity including, but not limited to, a partnership, limited liability company, association, trust, or corporation. See Rhode Island General Laws 27-72-2
  • Policy: means an individual or group policy, group certificate, contract, or arrangement of life insurance owned by a resident of this state, regardless of whether delivered or issued for delivery in this state. See Rhode Island General Laws 27-72-2
  • Provider: means a person, other than an owner, who enters into or effectuates a life settlement contract with an owner. See Rhode Island General Laws 27-72-2
  • Related provider trust: means a titling trust or other trust established by a licensed provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction. See Rhode Island General Laws 27-72-2
  • Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.

(b)  A violation of this section shall be deemed a fraudulent life settlement act.

History of Section.
P.L. 2009, ch. 195, § 1; P.L. 2009, ch. 262, § 1.