408-D:12 Prohibited Practices. –
I. It is a violation of this chapter for any person to solicit or promote STOLI or to knowingly participate in any transaction, practice, or course of business involving the sale or settlement of STOLI.
II. It is a violation of this chapter for any person to enter into a life settlement contract at any time prior to the application or issuance of a policy which is the subject of a life settlement contract or within a 5 year period commencing with the date of issuance of the insurance policy or certificate unless the viator certifies to the life settlement provider that one or more of the following conditions have been met within the 5 year period:
(a) The policy was issued upon the viator's exercise of conversion rights arising out of a group or individual policy, provided the total of the time covered under the conversion policy plus the time covered under the prior policy is at least 60 months. The time covered under a group policy shall be calculated without regard to any change in insurance carriers, provided the coverage has been continuous and under the same group sponsorship;
(b) The viator submits independent evidence to the life settlement provider that one or more of the following conditions have been met within the 5 year period:
(1) The viator or insured is terminally or chronically ill;
(2) The viator's spouse dies;
(3) The viator divorces his or her spouse;
(4) The viator retires from full-time employment;
(5) The viator becomes physically or mentally disabled and a physician determines that the disability prevents the viator from maintaining full-time employment; or
(6) A final order, judgment or decree is entered by a court of competent jurisdiction, on the application of a creditor of the viator, adjudicating the viator bankrupt or insolvent, or approving a petition seeking reorganization of the viator or appointing a receiver, trustee, or liquidator to all or a substantial part of the viator assets; or
(c) The viator enters into a life settlement contract more than 2 years after the date of issuance of a policy and, with respect to the policy, at all times prior to the date that is 2 years after policy issuance, the following conditions are met:
(1) Policy premiums have been funded exclusively with unencumbered assets, including an interest in the life insurance policy being financed only to the extent of its net cash surrender value, provided by, or fully recourse liability incurred by, the insured or a person described in RSA 408-D:2, IX(c)(5); and
(2) There is no agreement or understanding with any other person to guarantee any such liability or to purchase, or stand ready to purchase, the policy, including through an assumption or forgiveness of the loan.
III. Copies of the independent evidence described in subparagraph I(b) and document required by RSA 408-D:11, I shall be submitted to the insurer when the life settlement provider or other party entering into a life settlement contact with a viator submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter of attestation from the life settlement provider that the copies are true and correct copies of the documents received by the life settlement provider.
IV. If the life settlement provider submits to the insurer a copy of the owner or insured's certification described in and the independent evidence required by subparagraph I(c) when the life settlement provider submits a requests to the insurer to effect the transfer of the policy or certificate to the life settlement provider, the copy shall be deemed to conclusively establish that the life settlement contract satisfies the requirements of this section and the insurer shall timely respond to the request.
V. No insurer may, as a condition of responding to a request for verification of coverage or effecting the transfer of a policy pursuant to a life settlement contract, require that the viator, insured, life settlement provider or life settlement producer sign any forms, disclosures, consent, or waiver form that has not been expressly approved by the commissioner for use in connection with life settlement contracts in this state.
VI. Upon receipt of a properly completed request for change of ownership or beneficiary of a policy, the insurer shall respond in writing within 30 calendar days with written acknowledgement confirming that the change has been effected or specifying the reasons why the requested change cannot be processed. The insurer shall not unreasonably delay effecting change of ownership or beneficiary and shall not otherwise seek to interfere with any life settlement contract lawfully entered into in this state.
VII. With respect to any life settlement contract or insurance policy, no life settlement producer knowingly shall solicit an offer from, effectuate a life settlement with or make a sale to any life settlement provider, life settlement purchaser, financing entity or related provider trust that is controlling, controlled by, or under common control with such life settlement producer.
VIII. With respect to any life settlement contract or insurance policy, no life settlement producer knowingly may enter into a life settlement contract with a viator, if, in connection with such life settlement contract, anything of value will be paid to a life settlement producer that is controlling, controlled by, or under common control with such life settlement provider or the life settlement purchaser, financing entity, or related provider trust that is involved in such life settlement contract.
IX. A violation of paragraph I or II shall be deemed a fraudulent life settlement act.
X. No life settlement provider shall enter into a life settlement contract unless the life settlement promotional, advertising, and marketing materials, as may be prescribed by rule, 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 a viator to reasonably believe that the insurance is free for any period of time shall be considered a violation of this chapter.
XI. No life insurance producer, insurance company, life settlement producer, or life settlement provider shall 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.