An Act To Protect Life Insurance Consumers
Maine Legislature, Session 123, LD 2091
Committee Amendment CA_A_H774 (House)
Amends: 24-A MRSA §6802-A, 24-A MRSA §6811

COMMITTEE AMENDMENT "fl " 
to H.P. 1477, L.D. 2091, Bill, "An Act To 
Protect Life Insurance Consumers" 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
'Sec. 1. 24-A MRSA §6802-A, sub-§6, ~A, as enacted by PL 2003, c. 636, §5, 
is amended to read: 
A. 
Acts or omissions committed by any person who, knowingly or with intent to 
defraud, for the purpose of depriving another of property or for pecuniary gain, 
commits, or permits its employees or its agents to engage in, acts including: 
(l) Presenting, causing to be presented or preparing with knowledge or belief 
that it will be presented to or by a settlement provider, settlement producer, 
financing entity, insurer, insurance producer or any other person false material 
information, or concealing material information, as part of, in support of or 
concerning a fact material to one or more of the following: 
(a) An application for the issuance of a settlement contract or insurance 
policy; 
(b) The underwriting of a settlement contract or insurance policy; 
( c) A claim for payment or benefit pursuant to a settlement contract or 
insurance policy; 
(d) Premiums paid on an insurance policy; 
(e) Payments and changes in ownership or beneficiary made in accordance 
with the terms of a settlement contract or insurance policy; 
(f) The reinstatement or conversion of an insurance policy; 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT" A" to H.P. 1477, L.D. 2091 
(g) The solicitation, offer, effectuation or sale of a settlement contract or 
insurance policy; 
(h) The issuance of written evidence of a settlement contract or insurance 
policy; or 
(i) A financing transaction; ef 
(2) 
Employing any device, scheme or artifice to defraud related to policies 
acquired pursuant to a settlement contract; 
(3) Entering into stranger-originated life insurance; or 
(4) Failing to disclose to the insurer when requested by the insurer that the 
prospective insured has undergone a life expectancy evaluation by any person 
other than the insurer or its authorized representatives in connection with the 
issuance of a policy; 
Sec. 2. 24-A MRS A §6802-A, sub-§6-A is enacted to read: 
6-A. Life expectancy evaluation. "Life expectancy evaluation" means the process 
to determine the arithmetic mean of the number of months the insured under the life 
insurance policy to be settled can be expected to live considering medical records and 
appropriate experiential data. 
Sec. 3. 24-A MRS A §6802-A, sub-§9, as enacted by PL 2003, c. 636, §5, is 
repealed. 
Sec. 4. 24-A MRSA §6802-A, sub-§9-A is enacted to read: 
9-A. 
Settlement contract. 
"Settlement contract" means a written agreement 
between a viator and a settlement provider establishing the terms under which 
compensation or anything of value wiII be paid, which compensation or value is less than 
the expected death benefit of the insurance policy or certificate, in return for the viator's 
assignment, transfer, sale, devise or bequest of the death benefit or ownership of any 
portion of the insurance policy or certificate of insurance. "Settlement contract" includes 
the transfer for compensation or value of ownership or beneficial interest in a trust or 
other entity that owns such policy if the trust or other entity was formed or availed of for 
the principal purpose of acquiring one or more life insurance contracts, which life 
insurance contract insures the life of a person residing in this State. "Settlement contract" 
includes a premium finance loan made for a life insurance policy by a lender to a viator 
on or before the date of issuance of the policy when the viator or the insured receives on 
the date of the premium finance loan a guarantee ofa future settlement value of the policy 
or when the viator or the insured agrees on the date of the premium finance loan to sell 
the policy or any portion of its death benefit on any date following the issuance of the 
policy. "Settlement contract" does not include: 
A. A policy loan or accelerated death benefit made by the insurer pursuant to the 
policy's terms; 
B. A collateral assignment of a policy by the owner of the policy; 
C. Loan proceeds that are used solely to pay: 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT" A " 
to H.P. 1477, L.D. 2091 
(1) Premiums for the policy; and 
(2) The costs of the loan, including, without limitation, interest, arrangement 
fees, utilization fees and similar fees, closing costs, legal fees and expenses, 
trustee fees and expenses and 3rd-party collateral provider fees and expenses, 
including fees payable to letter of credit issuers; 
D. A loan made by a bank or other licensed financial institution in which the lender 
takes an interest in a life insurance policy solely to secure repayment of a loan or, if 
there is a default on the loan and the policy is transferred, the transfer of such a policy 
by the lender, as long as neither the default itself nor the transfer of the policy in 
connection with such default is pursuant to an agreement or understanding with any 
other person for the purpose of evading regulation under this chapter; 
E. Unless the premium finance loan otherwise constitutes a settlement contract under 
this subsection, a loan made by a lender that does not violate Title 9-A, Article 2; 
F. An agreement in which all the parties are closely related to the insured by blood or 
law or have a lawful substantial economic interest in the continued life, health and 
bodily safety of the person insured or are trusts established primarily for the benefit 
of such parties; 
G. Any designation, consent or agreement by an insured who is an employee of an 
employer in connection with the purchase by the employer, or by a trust established 
by the employer, of life insurance on the life of the employee; 
H. A bona fide business succession planning arrangement: 
(1) Between shareholders in a corporation or between a corporation and one or 
more of its shareholders or one or more trusts established by its shareholders; 
(2) Between partners in a partnership or between a partnership and one or more 
of its partners or one or more trusts established by its partners; or 
(3) 
Between members in a limited liability company or between a limited 
liability company and one or more of its members or one or more trusts 
established by its members; 
I. 
An agreement entered into by a service recipient, or a trust established by the 
service recipient, and a service provider, or a trust established by the service provider, 
who performs significant services for the service recipient's trade or business; or 
J. Any contract, transaction or arrangement other than those set forth in paragraphs A 
to I exempted from the definition of "settlement contract" by the superintendent by 
rule based on a determination that the contract, transaction or arrangement is not of 
the type intended to be regulated by this chapter. Rules adopted pursuant to this 
paragraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-
A. 
Sec. 5. 24-A MRSA §6802-A, sub-§12-A is enacted to read: 
12-A. Stranger-originated life insurance. 
"Stranger-originated life insurance" 
means an act or practice to initiate a life insurance policy for the benefit of a person who, 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT" A " to H.P. 1477, L.D. 2091 
at the time of the origination of the policy, has no insurable interest in the insured. 
"Stranger-originated life insurance" includes, but is not limited to, cases in which life 
insurance is purchased with resources or guarantees from or through a person who, at the 
time of the inception of the policy, could not lawfully initiate the policy and when, at the 
time of policy inception, there is an arrangement or agreement to directly or indirectly 
transfer the ownership of the policy or the policy benefits to another person. A trust that 
is created to give the appearance of insurable interest and is used to initiate policies for 
investors violates insurable interest laws and the prohibition against wagering on life. 
"Stranger-originated life insurance" does not include those practices set forth in 
subsection 9-A. 
Sec. 6. 24-A MRSA §6811, sub-§5, as enacted by PL 2003, c. 636, § 13, is 
amended to read: 
5. Prohibition on settlements. It is a violation of this chapter for any person to 
enter into a settlement contract at any time prior to, or at the time of the application for, 
the issuance of a policy or within a 2-year period commencing with the date of issuance 
of the insurance policy or certificate unless the viator certifies to the settlement provider 
that one or more of the following conditions have been met within the 2-year period: 
A. 
The policy was issued upon the viator's exercise of conversion rights arising out 
of a group or individual policy, as long as the total of the time covered under the 
conversion policy plus the time covered under the prior policy is at least 24 months. 
The time covered under a group policy must be calculated without regard to any 
change in insurance carriers, as long as the coverage has been continuous and under 
the same group sponsorship; and 
B. 
The viator submits independent evidence to the settlement provider that one or 
more of the following conditions have been met within the 2-year period: 
(1) The viator or insured is terminally ill or chronically ill; or 
(2) The viator or insured disposes of the viator's entire ownership interest in a 
closely held corporation pursuant to the terms of a buyout or other similar 
agreement in effect at the time the insurance policy was initially issued. 
Sec. 7. Review by Bureau of Insurance. The Superintendent of Insurance shall 
review current state law, other state laws and model laws relating to life settlements. In 
conducting the review, the superintendent shall consult with insurance companies, 
persons or companies or their trade or professional organizations licensed in this or other 
jurisdictions to do the business of life settlements and insurance producers. 
The 
superintendent shall develop recommendations relating to the solicitation of life insurance 
for the purpose of settling policies, the use of premium finance agreements in association 
with viatical and life settlements and the disclosures made to viators and owners of life 
insurance policies. The superintendent shall submit any recommendations, including 
recommendations for legislation, to the joint standing committee of the Legislature 
having jurisdiction over insurance and financial service matters not later than March 1, 
2009. The joint standing committee of the Legislature having jurisdiction over insurance 
and financial services matters may submit legislation to the First Regular Session of the 
124th Legislature related to the report submitted by the superintendent.' 
COMMITTEE AMENDMENT 
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II 
COMMITTEE AMENDMENT" A " 
to H.P. 1477, L.D. 2091 
SUMMARY 
This amendment replaces the bill. The amendment amends the Viatical and Life 
Settlements Act to: 
I. Repeal the definition of "settlement contract" and enact a new definition of 
"settlement contract"; 
2. Designate entering into stranger-originated life insurance a fraudulent viatical or 
life settlement act and define "stranger-originated life insurance"; 
3. Designate failing to disclose to the insurer when requested by the insurer that the 
prospective insured has undergone a life expectancy evaluation by a person other than the 
insurer a fraudulent viatical or life settlement act; and 
4. Extend the prohibition on settlement of a policy to any time prior to, or at the time 
of application for, the issuance of a policy. 
The amendment also requires the Superintendent of Insurance to review other state 
and model laws relating to viatical and life settlements and make recommendations, 
including recommendations for legislation, by March I, 2009 related to the solicitation of 
life insurance for the purpose of settling policies, the use of premium finance agreements 
in association with viatical and life settlements and the disclosures made to viators and 
owners of life insurance policies. The amendment gives the Joint Standing Committee on 
Insurance and Financial Services authority to submit legislation to the 124th Legislature 
based on the superintendent's recommendations. 
FISCAL :'Ion: RE(JllRED 
(See attached) 
COMMITTEE AMENDMENT 
Fiscal Detail and Notes 
Approved: 03/14/08 
~ac:. 
rd MAINE LEGISLATURE 
LD 2091 
LR 3217(02) 
An Act To Protect Life Insurance Consumers 
Fiscal Note for Bill as Amended by Committee Amendment" A " 
Committee: Insurance and Financial Services 
Fiscal Note Required: Yes 
Fiscal Note 
Minor cost increase - Other Special Revenue Funds 
Any additional costs to the Bureau ofInsurance in the Department of Professional and Financial Regulation can be 
absorbed by the department utilizing existing budget resources. 
LR3217(02) - Fiscal Note - Page I of I