Sections 10113.1 and 10113.2 of the California Insurance Code (CIC) defines viatical settlements and other specific financial arrangements as "life settlements." A person is prohibited from entering into or effectuating a life settlement contract with an owner unless that person holds a Life Settlement Provider license. Listed below are the specific requirements that must be met to obtain a life settlement provider license.
Life Settlement Provider
Section 10113.1 (r) states, in part, that a "Provider" means a person, other than an owner, who enters into or effectuates a life settlement contract with an owner. A provider does not include any of the following:
- Any bank, savings bank, savings and loan association, or credit union.
- A licensed lending institution or creditor or secured party pursuant to a premium finance loan agreement which takes an assignment of a life insurance policy or certificate issued pursuant to a group life insurance policy as collateral for a loan.
- The insurer of a life insurance policy or rider to the extent of providing accelerated death benefits or riders or cash surrender value.
- A purchaser.
- Any authorized or eligible insurer that provides stop loss coverage to a provider, purchaser, financing entity, special purpose entity, or related provider trust.
- A financing entity.
- A related provider trust.
- A broker.
- An accredited investor or qualified institutional buyer as defined respectively in Regulation D, Rule 501 or Rule 144A of the federal Securities Act of 1933, as amended, who purchases a life settlement policy from a provider.
Life Settlement Provider Application
An applicant for a Life Settlement Provider license must submit an Application for a Life Settlement Provider, form LIC 441-19, including an application fee in the amount of $3,180 (effective 6/15/2013 this fee will be $3,498). Once the Life Settlement Provider application is completely filled out, Applicant may upload a copy of the application utilizing the Department's OASIS (Online Assistance System for Insurer Submittals). The provider applicant shall upload as attachments to its provider application all forms the applicant intends to use to transact California life settlement business. Before using OASIS, Applicant must contact the Department of Insurance for an Entity Identifying Number (EID). Please e-mail either Pacita Ganzon, Cynthia Johnson,or Roisa Soliven to obtain an EID. Make sure you advise the Department of the complete name of the Applicant and that the license sought is a Life Settlement Provider's License.
The Life Settlement Provider Application includes an Applicant Certification which requires the person having authority to bind the provider to certify that they have reviewed sections 10113.1 through 10113.3 of the California Insurance Code and Section 2548.1 et seq. (Life Settlements) of Title 10 of the California Code of Regulations. In addition, this individual must certify their understanding that pursuant to sections 10113.1(g)(2)(D) and 10113.2(b) of the CIC, any false statement may subject their application to denial and may subject their license/s to suspension and revocation.
The Commissioner's issuance of a provider's license to a legal entity authorizes all officers, partners, and key management personnel to act as a life settlement provider.
Life Settlement Provider License Renewal
The term for the Life Settlement Provider license is one year. The annual renewal fee is $199 (effective 6/15/2013 this fee will be $219).
Life Settlement Forms
Once a life settlement provider is licensed, Section 10113.2 (c) of the California Insurance Code (CIC) states, in part, that such licensee shall file with the department a copy of all life settlement forms used in this state. No licensee may use any life settlement form in this state unless it has been provided in advance to the commissioner. Life settlement providers shall file such forms by filling out and submitting a Life Settlement Form Filing Cover Sheet, form LIC 441-20C, along with a copy of the forms to be filled with the Commissioner. The cover letter and a copy of the forms shall be submitted to the Commissioner by uploading the documents utilizing the OASIS (Online Assistance System for Insurer Submittals).
Section 10113.2(c) of the CIC also states, in part, that the commissioner may disapprove a life settlement form if, in his or her discretion, the form, or provisions contained therein, are contrary to the interests of the public, or otherwise misleading or unfair to the consumer. In the case of disapproval, the licensee may, within 15 days of notice of the disapproval, request a hearing before the commissioner or his or her designee, and the hearing shall be held within 30 days of the request.