AB 758

Under current law, the owner of a life insurance policy that insures a person

who has a catastrophic or life-threatening illness or condition, including AIDS or

HIV infection, may sell the policy for an amount that is less than the expected death

benefit under the policy in a transaction known as a viatical settlement. The person

that makes the payment under the viatical settlement is known as a viatical

settlement provider (provider) and must be licensed by the commissioner of

insurance (commissioner). A person who, for a fee, offers or attempts to negotiate a

viatical settlement between the owner of a life insurance policy and one or more

providers is known as a viatical settlement broker (broker) and must be licensed by

the commissioner. The commissioner may revoke, suspend, or refuse to renew a

provider's or broker's license if the licensee misrepresented information in the

application; engaged in fraudulent or dishonest practices or is shown to be

untrustworthy or incompetent to act as a provider or broker; has been convicted of

a misdemeanor or felony involving fraud, deceit, or misrepresentation; violated

Wisconsin law regarding viatical settlements; or if licensed as a provider, failed to

meet the minimum settlement payment requirements or demonstrated a pattern of

making unreasonable payments to policy owners. Every provider or broker must

maintain records for all viatical settlements and make those records available to the

commissioner for inspection.

Currently, if a policy owner who is seeking a viatical settlement has a

catastrophic or life-threatening illness or condition and is the insured under the

policy, the provider must obtain from the policy owner's physician a statement that

the owner is of sound mind before entering into a viatical settlement contract with

the policy owner. The provider must also obtain a written statement in which the

policy owner consents to the viatical settlement contract; acknowledges his or her

catastrophic or life-threatening illness or condition; releases his or her medical

records to the provider; represents that he or she understands the viatical settlement

contract, the benefits under the life insurance policy, and the relationship between

the viatical settlement contract and the life insurance policy; acknowledges that he

or she is entering into the viatical settlement contract freely and voluntarily; and

affirms that he or she has received a recommendation from a provider or broker to

seek financial advice regarding the effect of the viatical settlement on creditor

claims, income taxes, and government benefits. Before the execution of the viatical

settlement contract, the provider or broker must make disclosures, including that

there may be alternatives to viatical settlements; that the policy owner should obtain

financial advice; that some or all of the viatical settlement proceeds may be taxable

or subject to the claims of creditors; that a viatical settlement may adversely affect

the recipient's eligibility for government benefits; that the policy owner may rescind

the viatical settlement contract; the frequency of and procedure for contacts by the

provider or broker to determine the health status of the policy owner; the