The Office of General Counsel issued the following opinion on July 13, 2005, representing the position of the New York State Insurance Department.
Re: Solicitation for Purchase of Life Insurance Policy
Issue:
Is a license as a Viatical Settlement Broker required to solicit individuals, who would not be Viators, to sell their life insurance policies?
Conclusion:
If the prospective sellers are not Viators, no license as a Viatical Settlement Broker would be required.
Facts:
The inquirer is licensed as an insurance agent in accordance with New York Insurance Law § 2103(a) (McKinney 2000 and 2005 Supplement). The inquirer indicates:
I would like to advertise to regular healthy people who might want to sell their existing life insurance policies and do a life settlement. I am not specifically looking for people who are viators meaning they have a catastrophic illness or less than two years to live.
The inquirer seeks confirmation of the belief that a license as a Viatical Settlement Broker would not be required in order to engage in such solicitation.
Analysis:
New York Insurance Law § 7802(a) (McKinney 2000 and 2005 Supplement) provides:
No individual, partnership, corporation or other entity may act as a viatical settlement . . . broker or enter into or solicit a viatical settlement without first having obtained a license from the superintendent, in accordance with procedures established by regulation.
New York Insurance Law § 7801(d) (McKinney 2000) defines a Viatical Settlement Broker:
Viatical settlement broker means an individual, partnership, corporation or other entity who or which for another and for a fee, commission, or other valuable consideration, offers or advertises the availability of viatical settlements, introduces viators to viatical settlement companies, or offers or attempts to negotiate viatical settlements between a viator and one or more viatical settlement companies. . . .
A Viator is defined in New York Insurance Law § 7801(b):
Viator means the owner of a life insurance policy insuring the life of a person who has a catastrophic or life threatening illness or condition, who enters into an agreement under which the viatical settlement company will pay compensation or anything of value, which compensation or value is less than the expected death benefit of the insurance policy, in return for the viator's assignment, transfer, sale, devise or bequest of the death benefit or ownership of the insurance policy to the viatical settlement company. . . .
Accordingly, under the New York Insurance Law (McKinney 2000 and 2005 Supplement), provided the inquirer does solicit viators, no license as a Viatical Settlement Broker would be required.
For further information please contact Principal Attorney Alan Rachlin at the New York City office.