BILL NUMBER: SB 98INTRODUCED BILL TEXT INTRODUCED BY Senator Calderon JANUARY 26, 2009 An act to amend Section 10113.1 of the Insurance Code, relating to viatical settlements. LEGISLATIVE COUNSEL'S DIGEST SB 98, as introduced, Calderon. Viatical settlements. Existing law excludes from the definition of a viatical settlement an assignment of a life insurance policy to a licensed lending institution or credit union as collateral for a loan. This bill would specify that an assignment of a life insurance policy to a licensed lending institution or credit union as collateral for loans is also excluded from the definition of a viatical settlement. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 10113.1 of the Insurance Code is amended to read: 10113.1. (a) (1) As used in this section, a "viatical settlement" means an agreement entered into between a person owning a life insurance policy upon the life of a person with a catastrophic or life-threatening illness or condition and another person by which the policy owner receives compensation or anything of value less than the death benefits of the insurance policy in return for an assignment, transfer, sale, devise, or bequest of the death benefits or ownership of the insurance policy, but does not include an assignment of a life insurance policy to a licensed lending institution or credit union as collateral for a loan or loans . (2) As used in this section, "person" means any natural person or legal entity including, but not limited to, individuals, partnerships, associations, trusts, or corporations including a resident or nonresident life and disability insurance agent licensed by the commissioner. The life and disability insurance agents shall file with the commissioner a declaration that the person's life and disability agent license is valid and in good standing. The life and disability insurance agent shall provide copies of all endorsements and appointments received by the agent to engage in the business of viatical settlements. If the commissioner determines that the agent's life and disability agent license is invalid or not in good standing, or the agent has failed to submit any fees or proper endorsements or appointments, the commissioner may suspend the agent' s ability to transact or otherwise be involved in viatical settlements. (b) A viatical settlement shall not include a provision for payment of cash surrender values, loans or other benefits made by an insurer in accordance with the policy provisions. (c) Any person entering into a viatical settlement with any person with a catastrophic or life-threatening illness or condition shall first obtain the following: (1) A written statement from a licensed medical practitioner attending the person that the person is of sound mind and under no constraint or undue influence. (2) A duly witnessed signed document in which the person consents to the viatical settlement, acknowledges the catastrophic or life-threatening illness, represents that he or she has a full and complete understanding of the viatical settlement, that he or she has a full and complete understanding of the benefits of the life insurance policy, a release of his or her medical records, and acknowledges that he or she has entered into the settlement freely and voluntarily. (d) No person domiciled, residing or conducting business in California may do any of the following unless he or she has complied with subdivision (c): (1) Enter into a viatical settlement with any person, domiciled or residing in California. (2) Execute a viatical settlement in whole or in part in this state. (e) A violation of this section is a misdemeanor.