Ins 2.18(4)(c)(c) Each compliance period for recurring training required under s. 632.69 (3), Stats., shall commence on July first immediately following the preceding compliance period and shall end 24 months later on June 30. Ins 2.18(4)(d)(d) Recurring training required under s. 632.69 (3) (e), Stats., shall be completed and reported at a rate of not less than 2 hours each 12 months of each compliance period. Ins 2.18(5)(5) Notification of formal administrative actions, criminal proceedings and lawsuits. A licensed broker or provider shall notify the commissioner in writing of the following within 30 days: Ins 2.18(5)(a)(a) Except for action taken by the Wisconsin office of the commissioner of insurance, any formal administrative action against the broker or provider taken by any state’s regulatory agency, commission or board or other regulatory agency which licenses the person for any occupational activity. The notification shall include a description of the basis for the administrative action and any action taken as a result of the proceeding, a copy of the notice of hearing and other documents describing the problem, a copy of the order, consent to order, stipulation, final resolution, and other relevant documents. Ins 2.18(5)(b)(b) Any initial pretrial hearing date related to any criminal prosecution of the broker or provider taken in any jurisdiction, other than a misdemeanor charge related to the use of a motor vehicle or the violation of a fish and game regulation. The notification shall include a copy of the initial criminal complaint filed, the order resulting from the hearing and any other relevant legal documents. Ins 2.18(5)(c)(c) Any felony conviction or misdemeanor conviction of the licensee in any jurisdiction, other than a misdemeanor conviction related to the use of a motor vehicle or the violation of a fish and game regulation. The notification shall include a copy of the initial criminal complaint or criminal charging document filed, the judgment of conviction, the sentencing document, the broker’s explanation of what happened to cause criminal proceedings, the licensee’s reasons why no action should be taken regarding the life settlement and any other relevant legal documents. Ins 2.18(5)(d)(d) Any lawsuit filed against the licensee in which there are allegations of misrepresentation, fraud, theft or embezzlement involving the licensee. The notification shall include a copy of the initial suit documents, the licensee’s explanation of what happened to cause the civil proceedings, why no action should be taken regarding the life settlement broker’s license, and any other relevant legal documents. Ins 2.18(6)(6) Notification to office. A licensee shall notify the office in writing of any of the following within 30 days after the date of the occurrence: Ins 2.18(6)(a)(a) The cessation of business activities as a broker or provider. A notification under this subsection shall include the name and address of the custodian of the licensee’s business records and the location of the records. Ins 2.18(6)(b)(b) Any change in the broker’s or provider’s business mailing address or the location of its business records. Ins 2.18(6)(c)(c) New or revised information about officers, partners, directors, members, designated employees, or stockholders, except stockholders owning fewer than ten percent of the shares of a provider or broker whose shares are publicly traded. Ins 2.18(8)(a)(a) Purpose. This subsection interprets and implements s. 632.69, Stats., by specifying the content of certain notices required to be given to policyholders, owners and purchasers. Ins 2.18(8)(b)(b) Notice format. An insurer shall use the forms in Appendices I, II, and III to comply with this subsection. Each notice shall be in no less than 10-point type, and shall include the issuer’s address, toll free telephone number, if available, and telephone number in no less than 12-point type. Ins 2.18(8)(c)2.2. For each life insurance policy issued, life insurers shall provide to individual life insurance policyholders at the time the policy is issued the notice prescribed in Appendix I to this section. Ins 2.18(8)(c)3.3. In addition, life insurers shall provide a statement informing the policyholder that if the policyholder is considering making changes in the status of a policy, the policyholder should consult with a licensed insurance agent or financial advisor to find an alternative best suited to the policyholder’s needs. The statement shall advise the policyholder that additional information is available from the office of the commissioner of insurance at its website address: http://oci.wi.gov or by telephone at 1-800-236-8517. The statement shall be sent to the policyholder annually, and may be included in notices or mailings otherwise provided to policyholders. Ins 2.18(8)(c)4.4. The commissioner shall make information concerning policy alternatives available to the public. Ins 2.18(8)(c)5.5. Compliance by insurers with the requirements of par. (c) shall commence three months after September 1, 2012. Ins 2.18(8)(d)(d) Disclosure to owner. In accordance with s. 632.69 (8) (a) 2., Stats., at the time disclosures required by s. 632.69 (8) (a) 1., Stats., are provided by the broker or provider with each application for a life settlement, the broker or provider shall provide to the owner a brochure entitled “Wisconsin Guide to Understanding Life Settlements” as prescribed in Appendix II to this section. Ins 2.18(8)(e)(e) Disclosure to purchaser. In accordance with s. 632.69 (9) (a) 2., Stats., at the time disclosures required by s. 632.69 (9) (a) 1., Stats., are provided by the provider to the purchaser, and prior to the date that a life settlement purchase agreement is signed by all parties, a provider shall provide to the purchaser a brochure entitled “Wisconsin Guide to Purchase of a Life Settlement” as prescribed in Appendix III to this section. Ins 2.18 HistoryHistory: CR 10-051: cr. Register August 2012 No. 680, eff. 9-1-12. Ins 2.18 Appendix I
Important information about your life insurance policy
Keep this information with your insurance papers
Life insurance is a critical part of a broader financial plan. If you are considering making changes in the status of your policy you should consult with a licensed insurance or financial advisor in order to find an alternative best suited to your needs. Available alternatives include but are not limited to:
• Accelerated Death Benefit: Your policy may provide an early or accelerated cash payment if you have a terminal or chronic illness.
• Cash Surrender: Your policy may have a cash surrender value the life insurer will pay you if you surrender your policy.
• Gift: You may be able to give your policy to another person, who would then assume responsibility for paying premiums.
• Life Settlement: You may be able to sell your life insurance policy to a third party for an amount greater than the cash surrender value or accelerated death benefit but less than the expected death benefit under your policy. The third party becomes the policyholder and receives the benefit upon the death of the insured. Upon sale to the third party you would pay no further premium. Wisconsin law requires brokers and providers who arrange life settlements to be licensed.
• Maintain Your Policy: You may be able to maintain your life insurance policy in force by paying the premiums directly or using your current policy value to pay the premiums.
• Policy Changes: You may be able to reduce or eliminate future premium payments by obtaining a paid-up policy, by reducing coverage, or through other options available from your life insurer.
• Policy Loan: You may be able to obtain a loan from your life insurance company using the cash value of your policy as collateral. Loan proceeds may be used to pay premiums or for other purposes.
• Third-Party Loan: You may be able to obtain a loan from another party to pay your premiums using the cash value or a portion of the death benefit as collateral.
The listed alternatives may or may not be available depending on your circumstances and the terms of your life insurance policy.
If you have a specific concern about your life insurance policy, contact your insurance company or agent:
(Insurer name)
(Customer service)
(Address)
(Toll free telephone number, if available)
(Telephone number)
You may also contact your financial advisor, or you may contact the Office of the Commissioner of Insurance at 1-800-236-8517 or 608-266-0103; Email: ociquestions@wisconsin.gov. Ins 2.18 Appendix II
WISCONSIN GUIDE TO UNDERSTANDING LIFE SETTLEMENTS
Keep this information with your insurance papers
Thinking about selling your life insurance policy? Life insurance is a critical part of a broader financial plan. If you are considering a sale of your life insurance you should consult with a licensed insurance or financial advisor, attorney or accountant to find an option best suited to your needs.
What is a life settlement? A life settlement is the sale of a life insurance policy to a third party for a cash amount that is greater than the cash surrender value or accelerated death benefit but less than the expected full death benefit under the policy. The third party becomes the new owner or beneficiary of the life insurance policy, is responsible for paying all future premiums, and collects the entire death benefit when the insured dies.
Questions to ask before you sell your life insurance policy:
• Do I still need life insurance protection?
• Have I discussed all my choices with a professional advisor?
• If I sell my policy how much cash will I get?
• If I sell my policy will I be able to get additional life insurance in the future?
• Is my life insurance provided by an employer or other group policy? If so do I have the right to sell it?
• If I sell my policy, who will be the legal owner? Will the policy be resold?
• Who will have specific personal or medical information about me? How often can medical information be requested about me? Will I be required to permit others to contact my medical providers or family members concerning my medical information?
• Is the broker or provider I plan to work with licensed to do life settlement business in Wisconsin?
• What are the costs and fees?
If you sell your life insurance it is important to know:
• You may have to pay income taxes on some or all of the settlement money you receive. Consult a tax professional.
• Creditors may be able to make claims against the settlement money you receive.
• A cash settlement may affect your eligibility for certain government assistance programs such as Medicaid or food stamps. Consult with the appropriate government agency, such as the county aging and disability resource service.
• Your policy could be resold and future owners may be able to track your health.
How does a life settlement work?
• You may contact a life settlement company directly or choose a broker to help you shop for the highest cash settlement. A listing of Wisconsin licensed life settlement brokers and providers is available at the OCI web site. A licensed broker represents only the policy owner and owes a fiduciary duty to the owner to act according to the owner’s instructions and in the best interest of the owner.
• You will complete an application form and sign a release allowing the potential buyer to use your medical records to evaluate your life expectancy.
• You select the best offer from those submitted to you.
• Once you accept a settlement offer an escrow account will be set up to hold your policy and the purchaser’s money until the documents that change ownership of the policy and the beneficiary have been received and processed by the insurance company.
• Within three business days after the life settlement company gets written proof that the changes in policy ownership and beneficiary have been processed by the insurance company, the settlement proceeds will be sent to you.
• You can change your mind about the life settlement within 30 days from the date of the life settlement contract or 15 days after you are paid, whichever is earlier. If you cancel the settlement contract, you must return the cash settlement plus any premiums paid by the buyer, and repay any loan and loan interest paid on account of the life settlement. If you die within the period, the life settlement contract is cancelled and the named beneficiaries will receive the death benefit, but any cash settlement funds received plus any premiums paid by the buyer, and any loan and loan interest paid on account of the life settlement must be returned to the buyer within 60 days of the date of death.
• Your contract may require you to allow future owners of your policy to regularly contact you to check your health status.
Consumer tips.
• Comparison shop. Get quotes from several settlement companies and be sure you have the best offer.
• You do not have to accept any life settlement offer. You should decide what is in your best interests.
• Check all application forms for accuracy, especially your personal information and medical history.
• Be cautious of any offer to loan you money to buy life insurance. Ask what strings are tied to the loan, and what will happen if the loan is not repaid.
• Stranger-originated life insurance is prohibited. Contact the Office of the Commissioner of Insurance if you are offered any money or a gift to purchase life insurance, or if you are offered “free” life insurance for a period of time, or if you are asked to purchase life insurance for the purpose of selling it to investors.
Questions or complaints? Contact your insurance company or agent:
(Insurer Name)
(Customer Service)
(Address)
(Toll free telephone number, if available)
(Telephone number)
Ins 2.18 Appendix III
WISCONSIN GUIDE TO PURCHASE OF A LIFE SETTLEMENT
Keep this important information
Thinking about buying a life settlement as an investment? Life settlements allow life insurance policyholders to sell their policies for an immediate cash benefit that is less than the face value of the policy. In return, the buyer of the life settlement becomes the new owner or beneficiary of the life insurance policy, is responsible for payment of future premiums, and collects the death benefit when the insured dies. Typically, interests in the settled life insurance policies take the form of securities and are sold to investors. Multiple investors may invest in a single policy, or the investors may own an interest in an underlying pool of settled policies. When the insured dies the investor who has purchased an interest in the settled policy is entitled to collect a portion of the death benefit in accordance with the terms of the purchase contract. From an investor’s perspective a life settlement is an investment in the timely death of the insured person. Before you put your money into this type of investment it is critical that you understand the risks involved, know how your investment will be used, and know what the likely return will be. You should consult with a professional financial advisor, review Wisconsin regulations relating to the purchase of a life settlement, and deal with a licensed life settlement provider and registered securities broker dealer.
