Vt. Stat. Ann. tit. 08, § 3844 (2026)
Subchapter 005B : LIFE SETTLEMENTS
(Cite as: 8 V.S.A. § 3844)-
§ 3844. Prohibited practices
(a) It is a violation of this subchapter for any person to:
(1) Commit any fraudulent life settlement acts.
(2) Enter into any practice, agreement, arrangement, or transaction that results in or is intended to result in the issuance of stranger-originated life insurance or STOLI.
(3) Enter, within a five-year period commencing with the date of issuance of the insurance policy or certificate, into a life settlement contract unless the policy owner certifies to the life settlement provider that one or more of the following conditions have commenced or occurred after the date of issuance of the insurance policy or certificate and within the five-year period:
(A) The policy was issued upon the policy owner’s exercise of conversion rights arising out of a group or individual policy, provided the total of the time covered under the conversion policy plus the time covered under the prior policy is at least 60 months. The time covered under a group policy shall be calculated without regard to any change in insurance carriers, provided the coverage has been continuous and under the same group sponsorship.
(B) The policy owner submits independent evidence to the life settlement provider that one or more of the following conditions have commenced or occurred after the date of issuance of the insurance policy or certificate and within the five-year period:
(i) the policy owner or insured is terminally or chronically ill;
(ii) the policy owner’s spouse dies;
(iii) the policy owner divorces his or her spouse;
(iv) the policy owner retires from full-time employment;
(v) the policy owner becomes physically or mentally disabled and a physician determines that the disability prevents the policy owner from maintaining full-time employment;
(vi) a final order, judgment, or decree is entered by a court of competent jurisdiction, on the application of a creditor of the policy owner, adjudicating the policy owner bankrupt or insolvent or approving a petition seeking reorganization of the policy owner or appointing a receiver, trustee, or liquidator to all or a substantial part of the policy owner’s assets; or
(vii) the policy owner has suffered a significant economic reversal, as demonstrated by a 50 percent decline in the policy owner’s annual adjusted gross income, or by a 50 percent decline in the policy owner’s net worth, or as demonstrated by other facts and circumstances approved by the Commissioner.
(C) The policy owner enters into a life settlement contract more than two years after the date of issuance of a policy and, with respect to the policy, at all times prior to the date that is two years after policy issuance, the following conditions are met:
(i) policy premiums have been funded exclusively with unencumbered assets, including an interest in the life insurance policy being financed only to the extent of its net cash surrender value, provided by or with full recourse liability incurred by the insured or a person described in subdivision 3835(9)(C)(v) of this title;
(ii) there is no agreement or understanding with any other person to guarantee any such liability or to purchase or stand ready to purchase the policy, including through an assumption or forgiveness of the loan; and
(iii) a life settlement provider or a life settlement broker has not conducted a life expectancy evaluation of the insured in connection with a proposed settlement of the policy, and the insured has not undergone a life expectancy evaluation for settlement in connection with the issuance of the policy.
(b) Copies of the independent evidence described in subdivision (a)(3)(B) of this section and documents required by section 3842 of this title shall be submitted to the insurer when the life settlement provider or other party entering into a life settlement contract with a policy owner submits a request to the insurer for verification of coverage. The copies shall be accompanied by a letter of attestation from the life settlement provider that the copies are true and correct copies of the documents received by the life settlement provider.
(c) No insurer may, as a condition of responding to a request for verification of coverage or effecting the transfer of a policy pursuant to a life settlement contract, require that the policy owner, insured, life settlement provider, or life settlement broker sign any forms or disclosures of consent or waiver that have not been expressly approved by the Commissioner for use in connection with life settlement contracts in this State.
(d) Upon receipt of a properly completed request for change of ownership or beneficiary of a policy, the insurer shall respond in writing within 30 calendar days with written acknowledgment confirming that the change has been effected or specifying the reasons why the requested change cannot be processed. The insurer shall not unreasonably delay effecting change of ownership or beneficiary and shall not otherwise seek to interfere with any life settlement contract lawfully entered into in this state.
(e) It shall be a violation of this section to enter into a life settlement contract in reliance on the conditions established in subdivision (a)(3)(B) of this section if such condition commenced or occurred prior to the issuance of the insurance policy or certificate.
(f) The Commissioner shall adopt rules regulating the marketing and solicitation of life settlement products. (Added 2009, No. 53, § 1, eff. Jan. 1, 2010.)