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23-81-810. Disclosure to insurer.
Arkansas Code — all titles (historical 2020) · legal_authorities
23-81-810. Disclosure to insurer.
(a) Without limiting the ability of an insurer from assessing the insurability of a policy applicant and determining whether or not to issue the policy and in addition to other questions an insurance carrier may lawfully pose to a life insurance applicant, insurance carriers may inquire in the application for insurance whether the proposed owner intends to pay premiums with the assistance of financing from a lender that will use the policy as collateral to support the financing.
(b) If as described in § 23-81-802(11) the loan provides funds that can be used for a purpose other than paying for the premiums, costs, and expenses associated with obtaining and maintaining the life insurance policy and loan, the application shall be rejected as a violation of the prohibited practices in § 23-81-813.
(c) If the financing does not violate § 23-81-813 in this manner, the insurance carrier:
(1) May make disclosures, including without limitation to the following, to the applicant and the insured on the application or an amendment to the application to be completed no later than the delivery of the policy:
“If you have entered into a loan arrangement in which the policy is used as collateral and the policy does change ownership at some point in the future in satisfaction of the loan, the following may be true:
1. A change of ownership could lead to a stranger owning an interest in the insured's life;
2. A change of ownership could in the future limit your ability to purchase future insurance on the insured's life because there is a limit to how much coverage insurers will issue on one life;
3. Should there be a change of ownership and you wish to obtain more insurance coverage on the insured's life in the future, the insured's higher
Source: Arkansas Code — historical release 78 (November 6, 2020) · 23-81-810
Stored review status: Historical 2020-11-06 source release; later amendments not reconciled; machine-extracted, not independently legally reviewed; source heading status: text_in_historical_source. A text match is a research starting point; applicability is not established.
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Stable record: arkansas_code:legal_authorities:23-81-810
Source file: gov.ar.code.title.23.odt
Pages: Not recorded – Not recorded
Passage SHA-256: 5d3eb9388cd7d5793ad20a72bf002a6942b22064c43c0ff27414f6987357afb9
Source location: content.xml paragraph 49886
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23-81-810. Disclosure to insurer.
(a) Without limiting the ability of an insurer from assessing the insurability of a policy applicant and determining whether or not to issue the policy and in addition to other questions an insurance carrier may lawfully pose to a life insurance applicant, insurance carriers may inquire in the application for insurance whether the proposed owner intends to pay premiums with the assistance of financing from a lender that will use the policy as collateral to support the financing.
(b) If as described in § 23-81-802(11) the loan provides funds that can be used for a purpose other than paying for the premiums, costs, and expenses associated with obtaining and maintaining the life insurance policy and loan, the application shall be rejected as a violation of the prohibited practices in § 23-81-813.
(c) If the financing does not violate § 23-81-813 in this manner, the insurance carrier:
(1) May make disclosures, including without limitation to the following, to the applicant and the insured on the application or an amendment to the application to be completed no later than the delivery of the policy:
“If you have entered into a loan arrangement in which the policy is used as collateral and the policy does change ownership at some point in the future in satisfaction of the loan, the following may be true:
1. A change of ownership could lead to a stranger owning an interest in the insured's life;
2. A change of ownership could in the future limit your ability to purchase future insurance on the insured's life because there is a limit to how much coverage insurers will issue on one life;
3. Should there be a change of ownership and you wish to obtain more insurance coverage on the insured's life in the future, the insured's higher issue age, a change in health status, and/or other factors may reduce the ability to obtain coverage and/or may result in significantly higher premiums;
4. You should consult a professional advisor, since a change in ownership in satisfaction of the loan may result in tax consequences to the owner, depending on the structure of the loan.”; and
(2) May require certifications, such as the following, from the applicant, the insured, or the applicant and the insured:
(A) “I have not entered into any agreement or arrangement providing for the future sale of this life insurance policy.”;
(B) “My loan arrangement for this policy provides funds sufficient to pay for some or all of the premiums, costs, and expenses associated with obtaining and maintaining my life insurance policy, but I have not entered into any agreement by which I am to receive consideration in exchange for procuring this policy.”; and
(C) “The borrower has an insurable interest in the insured.”.
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Arkansas Code — all titles (historical 2020) · legal_authorities
23-81-802. Definitions.
As used in this subchapter:
(1) “Advertisement” means any written, electronic, or printed communication or any communication by means of recorded telephone messages or transmissions on radio, television, the Internet, or similar communications media, including film strips, motion pictures, and videos, published, disseminated, circulated, or placed before the public, directly or indirectly, to create an interest in or to induce a person to purchase or sell, assign, devise, bequest, or transfer the death benefit or ownership of a life insurance policy or an interest in a life insurance policy pursuant to a life settlement contract;
(2)(A) “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 providers.
(B) A broker represents only the 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, notwithstanding the manner in which the broker is compensated.
(C) “Broker” does not include an attorney, certified public accountant, or financial planner retained in the type of practice customarily performed in his or her professional capacity to represent the owner whose compensation is not paid directly or indirectly by the provider or any other person except the owner;
(3) “Business of life settlements” means an activity involved in, but not limited to, offering to enter into, soliciting, negotiating, procuring, effectuating, monitoring, or tracking life settlement contracts;
(4) “Chronically ill” means:
(A) Being unable to perform at least two (2) activities of daily living such as eating, toileting, transferring, bathing, dressing, or co
Source: Arkansas Code — historical release 78 (November 6, 2020) · 23-81-802
Stored review status: Historical 2020-11-06 source release; later amendments not reconciled; machine-extracted, not independently legally reviewed; source heading status: text_in_historical_source. The source passage cites 23-81-802. This identifies an authority to review, not proof of applicability.
Arkansas Code — all titles (historical 2020) · legal_authorities
23-81-813. Prohibited practices.
(a) It is unlawful for any person to:
(1) Enter into a life settlement contract if the person knows or reasonably should have known that the life insurance policy was obtained by means of a false, deceptive, or misleading application for the policy;
(2) Engage in any transaction, practice, or course of business if the person knows or reasonably should have known that the intent was to avoid the notice requirements of this section;
(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)(A) Enter into a premium finance agreement with any person or agency or any person affiliated with the person or agency pursuant to which the 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 the 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 the agreement.
(B) 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 life sett
Source: Arkansas Code — historical release 78 (November 6, 2020) · 23-81-813
Stored review status: Historical 2020-11-06 source release; later amendments not reconciled; machine-extracted, not independently legally reviewed; source heading status: text_in_historical_source. The source passage cites 23-81-813. This identifies an authority to review, not proof of applicability.