1. (a) A viatical settlement provider may not enter into or effectuate a viatical settlement contract that provides payment to the viator that is unreasonable or unjust. For life expectancies up to 24 months, the following discount rates as applied to the face value of a life insurance policy, less outstanding loans on the policy, will be presumed to be reasonable and just payment to a viator:

   1. (1) if the life expectancy of the insured is less than six months, at least 80 percent;
   2. (2) if the life expectancy of the insured is at least six months but less than 12 months, at least 70 percent;
   3. (3) if the life expectancy of the insured is at least 12 months but less than 18 months, at least 65 percent;
   4. (4) if the life expectancy of the insured is at least 18 months but less than 24 months, at least 60 percent.

2. (b) A viatical settlement provider may enter into or effectuate a viatical settlement contract that provides payment to a viator less than the amounts specified in (a) of this section, if the director determines the payment not to be unreasonable or unjust. In determining whether a payment is unreasonable or unjust, the director will consider

   1. (1) the life expectancy of the viator;
   2. (2) the applicable rating of the insurance company that issued the life insurance policy by a rating service generally recognized by the insurance industry, regulators, and consumer groups;
   3. (3) the prevailing discount rates in the viatical settlement market in this state, or if insufficient data is available for this state, the prevailing discount rates nationally or in other states that maintain this data, if the data is credible; if the director determines that credible prevailing discount rate data is not available, the director may require that payment to a viator under a viatical settlement contract must be consistent with the payments specified in (a) of this section; and
   4. (4) other factors relevant to whether the payment is unreasonable or unjust.

3. (c) If a life insurance policy contains a provision for double or additional indemnity for accidental death, the viatical settlement provider or insurance company shall pay the additional indemnity to the

   1. (1) beneficiary last named by the viator before entering into the viatical settlement contract;
   2. (2) designated beneficiary, if the viator designated a beneficiary other than the viatical settlement provider on or after entering into the viatical settlement contract; or
   3. (3) the estate of the viator, if the viator has not designated a beneficiary.

4. (d) A viatical settlement provider shall pay proceeds of a viatical settlement contract to the viator in a lump sum unless the

   1. (1) viatical settlement contract clearly states that payments will be made consistent with an annuity; and
   2. (2) viatical settlement provider has purchased an annuity or similar financial instrument issued by a licensed insurance company or bank or by an affiliate of a licensed insurance company or bank specifically for payment of proceeds under the viatical settlement contract.

5. (e) Within three working days after the viatical settlement provider's receipt of documents to effectuate the transfer of the insurance policy under a viatical settlement contract, the viatical settlement provider shall pay proceeds of the viatical settlement contract to an escrow or trust account in a state or federally chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation. The account must be managed by a trustee or escrow agent independent of the parties to the viatical settlement contract. The trustee or escrow account contract must provide for payment by wire transfer or by certified or cashier's check of the viatical settlement proceeds to the viator within three working days after the date that the viatical settlement provider receives an insurer's or group administrator's acknowledgement that

   1. (1) ownership of the policy or interest in the group certificate has been transferred to the viatical settlement provider; and
   2. (2) the beneficiary has been designated under the viatical settlement contract.
6. (f) A viatical settlement provider, trustee, or escrow agent may not retain a portion of the viatical settlement contract proceeds.

(Eff. 8/25/2002, Register 163)