Iowa Administrative Code › Agency 191 - Insurance Division › Securities › Chapter 50 - Regulation of Securities Offerings and Those Who Engage in the Securities Business › Rule 191-50.111 - Risk Disclosure

Current through Register Vol. 47, No. 3, July 24, 2024
Viatical settlement investment contract issuers and
				  registered agents of issuers must provide specific, written disclosures of risk
				  to Iowa investors at the time of the initial offer to sell a viatical
				  settlement investment contract. These disclosures must be preceded by the
				  following caption, which must be in bold, 16-point typeface:
IMPORTANT RISK DISCLOSURE INFORMATION-READ BEFORE SIGNING ANY
				  VIATICAL SETTLEMENT INVESTMENT CONTRACT
The disclosure must include, at a minimum, the following
				  information:
1. That the actual annual
				rate of return on any viatical settlement investment contract is dependent upon
				an accurate projection of the viator's life expectancy and the actual date of
				the viator's death and that an annual "guaranteed" rate of return is not
				possible;
2. Whether, after
				purchasing the viatical settlement investment contract, the investor will be
				responsible for payment of premiums on the contract if the viator lives longer
				than projected and if the investor will be responsible for such premiums, the
				amount of the premium payment and any resulting negative effect on the
				investor's return;
3. Whether any
				premium payments on the contract have been escrowed and, if so, the date upon
				which the escrowed funds will be depleted, who is responsible for payment of
				premiums after depletion of the funds, and, if applicable, the amount of the
				premiums;
4. Whether any premium
				payments on the contract have been waived, whether the investor will be
				responsible for payment of the premiums if the insurer who wrote the policy
				terminates the waiver after purchase, and, if applicable, the amount of the
				premiums;
5. Whether the investor
				is responsible for payment of premiums on the contract if the viator returns to
				health and, if applicable, the amount of the premiums;
6. Whether the investor is entitled to all or
				part of the investor's investment under the contract if the viator's underlying
				policy is later determined to be null and void;
7. Whether the insurance policy is a group
				policy and, if so, the special risks associated with group policies including,
				but not limited to, whether the investor is responsible for payment of
				additional premiums if the policies are sold or converted;
8. Whether the insurance policy is term
				insurance and, if so, the special risks associated with term insurance
				including, but not limited to, whether the investor is responsible for
				additional premium costs if the viator continues the term policy at the end of
				the current term;
9. Whether the
				investor will be the beneficiary or owner of the insurance policy and, if the
				investor is the beneficiary, the special risks associated with beneficiary
				status;
10. Whether the insurance
				policy is contestable and, if so, the special risks associated with
				contestability including, but not limited to, the risk that the investor will
				have no claim or only a partial claim to death benefits should the insurer
				cancel the policy within the contestability period;
11. Who is making the projection of the
				viator's life expectancy, the information upon which the projection is based,
				and the relationship of the projection maker to the issuer;
12. Who is monitoring the viator's condition,
				how often the monitoring is done, how the date of death is determined, and how
				and when this information will be transmitted to the investor;
13. Whether the insurer who wrote the
				viator's underlying policy has any additional rights which could negatively
				affect or extinguish the investor's rights under the viatical settlement
				investment contract, what these rights are, and under what conditions these
				rights are activated;
14. That a
				viatical settlement investment contract is not a liquid investment and that
				there is no established secondary market for resale of these products by the
				investor;
15. That the investor
				will receive no returns (i.e., dividends and interest) until the viator dies;
				and
16. That the investor may lose
				all benefits or receive substantially reduced benefits if the insurer goes out
				of business during the term of the viatical investment.
This rule is intended to implement Iowa Code sections
				  502102., 502.201(9E)
				  and
				  502301..