Life Insurance and Annuity Contracts

KRS tit. XXV, ch. 304, subtit. 15

in effect

KRS 304.15-010 Scope of Subtitle 15

304.15-010. Scope of Subtitle 15 The provisions of this subtitle apply only to contracts of life insurance and annuities, other than reinsurance, group life insurance and group annuities. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 1, effective June 18, 1970.

KRS 304.15-020 Definitions

304.15-020. Definitions (1) "Advertisement" means any written, electronic, or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet, or similar communication media, including film strips, motion pictures, and videos, published, disseminated, circulated, or placed directly before the public, for the purpose of creating an interest in or inducing a person to purchase or sell, assign, devise, bequest, or transfer the death benefit or ownership of a life insurance policy or an interest in a life insurance policy pursuant to a life settlement contract. (2) "Business of life settlements" means an activity involved in but not limited to the offering, solicitation, negotiation, procurement, effectuation, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothecating, or in any other manner, of life settlement contracts. (3) "Chronically ill" means: (a) Being unable to perform at least two (2) activities of daily living, including but not limited to eating, toileting, transferring, bathing, dressing, or continence; (b) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or (c) Having a level of disability similar to that described in paragraph (a) of this subsection as determined by the Secretary of Health and Human Services. (4) "College life insurance" is that form of life insurance sold to college students, the initial premiums for which are financed by a promissory note. (5) "Financing entity" means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy from a life settlement provider, credit enhancer, or any entity that has a direct ownership in a policy that is the subject of a life settlement contract but: (a) Whose principal activity related to the transaction is providing funds to effect the life settlement contract or purchase of one (1) or more policies or to provide credit enhancement; and (b) Who has an agreement in writing with one (1) or more licensed life settlement providers to finance the acquisition of life settlement contracts or to provide stop loss insurance. "Financing entity" does not include a nonaccredited investor or purchaser. (6) "Financing transaction" means a transaction in which a life settlement provider obtains financing from a financing entity, including without limitation any secured or unsecured financing, any securitization transaction, or any securities offering which either is registered or exempt from registration under federal and state securities law. (7) "Fraudulent life settlement act" includes: (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 his employees or its agents to engage in acts including: 1. Presenting, causing to be presented, or preparing with knowledge or belief that it will be presented to or by a life settlement provider, life settlement broker, life insurance producer, financing entity, insurer, premium finance lender, or any other person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to one (1) or more of the following: a. An application for the issuance of a life settlement contract or policy; b. The underwriting of a life settlement contract or policy; c. A claim for payment or benefit pursuant to a life settlement contract or policy; d. Premiums paid on a policy; e. Payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or policy; f. The reinstatement or conversion of a policy; g. In the solicitation, offer, effectuation, or sale of a life settlement contract or policy; h. The issuance of written evidence of a life settlement contract or policy; i. A financing transaction; j. Any application for or the existence of or any payments related to a loan secured directly or indirectly by any interest in a life insurance policy; or k. Stranger-originated life insurance; 2. Employing any device, scheme, or artifice to defraud related to policies acquired pursuant to a life settlement contract; 3. In the solicitation, application, or issuance of a life insurance policy, employing any device, scheme, or artifice in violation of state insurable interest laws; (b) Any of the following acts committed by any person or permitted by a person to be committed by the person's employees or agents in the furtherance of a fraud or to prevent detection of a fraud to: 1. Remove, conceal, alter, destroy, or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of life settlements; 2. Misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person; 3. Transact the business of life settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of life settlements; 4. File with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or which otherwise conceals information about a material fact from the commissioner; or 5. Misrepresent the state of residence of an owner to be a state or jurisdiction that does not have a law substantially similar to this section and KRS 304.15-700 to 304.15-720; (c) Embezzlement, theft, misappropriation, or conversion of moneys, funds, premiums, credits, or other property of a life settlement provider, life settlement broker, insurer, insured, owner, insurance policyowner, or any other person engaged in the business of life settlements or insurance; (d) Recklessly entering into, brokering, or otherwise dealing in a life settlement contract, the subject of which is a policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the owner or the owner's agent intended to defraud the policy issuer. For the purposes of this paragraph, "recklessly" means engaging in the conduct in conscious and clearly unjustifiable disregard of a substantial likelihood of the existence of the relevant facts or risks, such disregard involving a gross deviation from acceptable standards of conduct; or (e) Attempting to commit, assisting, aiding, or abetting in the commission of, or conspiracy to commit the acts or omissions specified in this subsection. (8) "Industrial life insurance" is that form of life insurance written under policies of face amount of $3,000 or less issued on the basis of an industrial mortality table, and under which premiums are payable monthly or more often. (9) "Life expectancy" means 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. (10) "Premium finance loan" means a loan made primarily for the purposes of making premium payments on a life insurance policy, which loan is secured by an interest in such life insurance policy. (11) "Purchaser" means a person who pays compensation or anything of value as consideration for a beneficial interest in a trust which is vested with, or for the assignment, transfer, or sale of, an ownership or other interest in a life insurance policy or certificate issued pursuant to a group life insurance policy which has been the subject of a life settlement contract. (12) "Related provider trust" means a titling trust or other trust established by a licensed life settlement provider or financing entity for the sole purpose of holding the ownership or beneficial interest in policies. The trust shall have a written agreement with the licensed life settlement provider under which the licensed life settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files related to life settlement transactions available to the commissioner as if those records and files were maintained directly by the licensed life settlement provider. (13) "Settled policy" means a life insurance policy or certificate that has been acquired by a life settlement provider pursuant to a life settlement contract. (14) "Special purpose entity" means a corporation, partnership, trust, limited liability company, or other similar entity formed solely to provide, either directly or indirectly, access to institutional capital markets for a financing entity or licensed life settlement provider. (15) "Stranger-originated life insurance" or "STOLI" means the procurement of new life insurance by persons or entities that lack insurable interest on the insured and, at policy inception, such person or entity owns or controls, or has an arrangement or agreement to own or control, the policy or the majority of the death benefit in the policy and the insured or insured's beneficiaries receive little or none of the proceeds of the death benefits of the policy. Trusts that are created to give the appearance of insurable interest and are used to initiate policies for investors violate insurable interest laws and the prohibition against wagering on life. STOLI arrangements do not include those practices set forth in paragraph (b) of subsection (17) of this section. (16) "Life settlement broker" or "broker" means an individual, partnership, corporation, or other person who is working exclusively on behalf of an owner and for a fee, commission, or other valuable consideration, offers or advertises the availability of life settlements, introduces an owner to life settlement providers, or offers or attempts to negotiate life settlements between an owner and one (1) or more life settlement providers. "Life settlement broker" does not include an attorney, certified public accountant, or financial planner who is retained to represent the owner and whose compensation is not paid directly or indirectly by the life settlement provider or any other person except the owner. (17) (a) "Life settlement contract" means a written agreement entered into between a life settlement provider and an owner owning a policy or who owns or is covered under a group policy insuring the life of a person and the agreement establishes the terms under which the life settlement provider will pay compensation or anything of value, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the owner's assignment, transfer, sale, devise or bequest of the death benefit or ownership of any portion of the insurance policy or certificate. A life settlement contract also includes a contract for a loan or other financing transaction with an owner secured primarily by an individual or group life insurance policy, other than a loan by a life insurance company pursuant to the terms of the life insurance contract, or a loan secured by the cash value of a policy. A life settlement contract includes an agreement with an owner to transfer ownership or change the beneficiary designation of a policy at a later date regardless of the date that compensation is paid to the owner. "Life settlement contract" does not mean a written agreement entered into between an owner and a person having an insurable interest in the insured's life. (b) "Life settlement contract" also includes a premium finance loan made for a policy on or before the date of issuance of the policy where: 1. The loan proceeds are not used solely to pay premiums for the policy and any costs or expenses incurred by the lender or the borrower in connection with the financing; 2. The owner receives on the date of the premium finance loan a guarantee of the future life settlement value of the policy; or 3. The owner 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. (c) "Life settlement contract" does not include: 1. A policy loan by a life insurance company pursuant to the terms of the life insurance policy or accelerated death provisions contained in the life insurance policy, whether issued with the original policy or as a rider; 2. A premium finance loan or any loan made by a bank or other licensed financial institution, provided that neither default on such loan 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 KRS 304.15-700 to 304.15-720; 3. A collateral assignment of a life insurance policy by an owner; 4. A loan made by a lender that does not violate Subtitle 30 of this chapter, if the loan is not described in paragraph (b) of this subsection and is not otherwise within the definition of life settlement contract; 5. An agreement where 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; 6. Any designation, consent, or agreement by an insured who is an employee of an employer in connection with the purchase by the employer, or trust established by the employer, of life insurance on the life of the employee; 7. A bona fide business succession planning arrangement: a. Between one (1) or more shareholders in a corporation or between a corporation and one (1) or more of its shareholders or one (1) or more trust established by its shareholders; b. Between one (1) or more partners in a partnership or between a partnership and one (1) or more of its partners or one (1) or more trust established by its partners; or c. Between one (1) or more members in a limited liability company or between a limited liability company and one (1) or more of its members or one (1) or more trust established by its members; 8. 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 9. Any other contract, transaction, or arrangement not included in the definition of life settlement contract as determined by the commissioner by administrative regulation. (18) "Life settlement provider" or "provider" means an individual, partnership, corporation, or other person who or that enters into an agreement with a person owning a policy under the terms of which the life settlement provider pays compensation or anything of value, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the policyowner's assignment, transfer, sale, devise, or bequest of the death benefit or ownership of the policy to the life settlement provider. Life settlement provider does not include: (a) Any bank, savings bank, savings and loan association, credit union, or other licensed lending institution or creditor or secured party that takes an assignment of a policy as collateral for a loan; (b) The issuer of a policy that provides accelerated benefits that accelerate in anticipation of death or upon the occurrence of specified life-threatening or catastrophic conditions as defined by the policy or rider; (c) Any natural person who is not licensed in accordance with KRS 304.15-700 and who enters into no more than one (1) agreement in a calendar year for the transfer of life insurance policies for any value less than the expected death benefit; (d) A related provider trust; (e) An authorized or eligible insurer that provides stop-loss coverage to a life settlement provider, financing entity, special purpose entity, or related provider trust; (f) A special purpose entity; (g) A related provider trust; (h) An accredited investor or qualified institutional buyer as defined respectively in Regulation D, Rule 501 or Rule 144A of the Federal Securities Act of 1933, as amended, and who acquires a policy from a life settlement provider; (i) A purchaser; (j) A financing entity; or (k) Broker. (19) "Owner" means a resident of this Commonwealth who is the owner of a policy or a certificate holder under a group policy who enters or seeks to enter into a life settlement contract. An owner shall not be limited to an owner of a life insurance policy or a certificate holder under a group policy insuring the life of an individual with a terminal or chronic illness or condition except where specifically addressed. If there is more than one (1) owner on a single policy and the owners are residents of different states, the transaction shall be governed by the law of the state in which the owner having the largest percentage of ownership resides or, if the owners hold equal ownership, the state of residence of one (1) owner agreed upon in writing by all owners. "Owner" does not include: (a) A life settlement provider licensed pursuant to KRS 304.9-440; (b) A qualified institutional buyer as defined in Rule 144A of the Federal Securities Act of 1933, as amended; (c) A financing entity; (d) A special purpose entity; or (e) A related provider trust. (20) "Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in twenty-four (24) months or less. (21) "Wholesale life insurance" is that plan of life insurance, other than salary savings life insurance or pension trust insurance and annuities, under which individual policies are issued to the employees of any employer and where policies are issued on the lives of not less than four (4) employees at date of issue. Premiums for the policies shall be paid either wholly from the employer's funds, or funds contributed by him, or partly from the funds and partly from funds contributed by the insured employees. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1175, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 32, sec. 1, effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 6, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 472, sec. 1, effective July 14, 2000. -- Amended 1998 Ky. Acts ch. 403, sec. 1, effective July 15, 1998. -- Amended 1976 Ky. Acts ch. 233, sec. 1, effective June 19, 1976. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 2, effective June 18, 1970. Legislative Research Commission Note (7/15/2008). The numbering of paragraphs in subsection (17) of this statute has been altered by the Reviser of Statutes from that in 2008 Ky. Acts ch. 32, sec. 1, under the authority of KRS 7.136(1)(a).

KRS 304.15-030 "Ordinary" and "industrial" insurance construed

304.15-030. "Ordinary" and "industrial" insurance construed In construing the provisions of KRS 304.15-310 to 304.15-360, inclusive, "ordinary insurance" or "insurance upon the ordinary plan" shall be considered to be insurance that may be paid for by a single premium, by annual premiums or by semiannual or quarterly or other installments thereon at the option of the insurer; and "industrial insurance" shall be considered to be insurance as defined in KRS 304.15-020. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 3, effective June 18, 1970.

KRS 304.15-035 Securities Act of Kentucky not preempted by subtitle

304.15-035. Securities Act of Kentucky not preempted by subtitle Nothing in this subtitle preempts or otherwise limits the provisions of the Securities Act of Kentucky, KRS Chapter 292, or any administrative regulations, orders, policy statements, notices, bulletins, or other interpretations issued by or through the commissioner of the Kentucky Department of Financial Institutions or the commissioner's designee acting pursuant to the Securities Act of Kentucky. Compliance with the provisions of this subtitle does not constitute compliance with any applicable provision of the Securities Act of Kentucky and any amendments thereto or any administrative regulations, orders, policy statements, notices, bulletins, or other interpretations issued by or through the commissioner of the Kentucky Department of Financial Institutions or the commissioner's designee acting pursuant to the Securities Act of Kentucky. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1176, effective July 15, 2010. -- Created 2005 Ky. Acts ch. 58, sec. 1, effective June 20, 2005.

KRS 304.15-040 Standard provisions required

304.15-040. Standard provisions required (1) No policy of life insurance other than pure endowments with or without return of premiums or of premiums and interest, shall be delivered or issued for delivery in this state unless it contains in substance all of the applicable provisions required by KRS 304.15-050 to 304.15-170, inclusive. This section shall not apply to annuity contracts nor to any provision of a life insurance policy, or contract supplemental thereto, relating to disability benefits or to additional benefits in the event of death by accident or accidental means. (2) Any of such provisions or portions thereof not applicable to single premium or nonparticipating or term policies or insurance granted in exchange for lapsed or surrendered policies, shall to that extent not be incorporated therein. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 4, effective June 18, 1970.

KRS 304.15-045 Letter of acceptance and financing agreement to be part of college life insurance policy

304.15-045. Letter of acceptance and financing agreement to be part of college life insurance policy No college life insurance policy shall be sold or delivered in this Commonwealth unless the following provisions are complied with: (1) A letter of acceptance, on a form approved by the commissioner, is presented to the proposed insured, setting forth the conditions concerning the financing agreement, the due date of the note, the amount of the note, the annual rate of interest on the note, and the annual premium on the policy; (2) The acceptance letter must be signed by the proposed insured, agreeing that he has read and understands the conditions, a copy to be retained by the insured, and a copy to be retained by the agent and company; (3) A copy of a financing arrangement is to be attached to and made a part of the contract. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1177, effective July 15, 2010. -- Created 1976 Ky. Acts ch. 233, sec. 3, effective June 19, 1976.

KRS 304.15-050 Payment of premiums -- Return of policy

304.15-050. Payment of premiums -- Return of policy (1) There shall be a provision relating to the time and place of payment of premiums. (2) There shall be a provision which shall state in substance that the policy may be returned by the policyowner to the company, within a period of not less than ten (10) days after its receipt to the company or to the agent through whom it was purchased. Immediately upon any such delivery, or mailing, of the policy to the company or agent, the policy will be deemed void from its inception and any premium paid for such policy shall be promptly returned to the policyowner by the company. This subsection shall not apply to policies of credit life insurance and policies issued under tax qualified pension plans. Effective: June 19, 1976 History: Amended 1976 Ky. Acts ch. 233, sec. 2, effective June 19, 1976. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 5, effective June 18, 1970.

KRS 304.15-060 Grace period

304.15-060. Grace period There shall be a provision that a grace period of thirty (30) days, or, at the option of the insurer, of one (1) month of not less than thirty (30) days, or of four (4) weeks in the case of industrial life insurance policies the premiums for which are payable more frequently than monthly, shall be allowed within which the payment of any premium after the first may be made, during which period of grace the policy shall continue in full force. The insurer may impose an interest charge for the number of days of grace elapsing before the payment of the premium, and, whether or not such interest charge is imposed, if a claim arises under the policy during such period of grace, the amount of any premium due or overdue, together with interest and any deferred installment of the annual premium, may be deducted from the policy proceeds. The grace period shall date from the premium due date specified in the policy. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 6, effective June 18, 1970.

KRS 304.15-070 Entire contract

304.15-070. Entire contract There shall be a provision that except as otherwise expressly provided by law, the policy and the application therefor, if a copy of such application is indorsed upon or attached to the policy when issued, shall constitute the entire contract between the parties, and that all statements contained in the application shall, in the absence of fraud, be deemed representations and not warranties. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 7, effective June 18, 1970.

KRS 304.15-075 Notice of policy owner's rights -- Contents -- Conditions requiring notice to be given -- Application to policies $100,000 or greater permitted

304.15-075. Notice of policy owner's rights -- Contents -- Conditions requiring notice to be given -- Application to policies $100,000 or greater permitted (1) The commissioner shall develop a notice by promulgation of administrative regulation to inform the owner of a policy of life insurance issued in this state of his or her rights as an owner of a life insurance policy. The notice shall be made available free of charge to insurance companies and life insurance producers, and shall be written in nontechnical language. (2) The notice developed under subsection (1) of this section shall: (a) Inform the consumer that life insurance is a critical part of a broader financial plan; (b) Inform the consumer that alternatives to lapse or surrender of the policy exist; (c) Provide the consumer with a general description of life settlements and state that life settlements are a regulated transaction in Kentucky; (d) Provide the consumer with a general description of other common products and services that may be available to owners of life insurance policies prior to lapse or surrender of a policy; and (e) Include a statement that advises recipients of the notice that life insurance, life settlements, or any of the products or services described in the notice may or may not be available to the recipient depending on a number of circumstances, including but not limited to the age and health of the insured or the terms of a life insurance policy. The statement shall also advise recipients that owners of life insurance policies are encouraged to contact their financial advisor, agent, or broker to seek further assistance or advice. (3) For each policy issued, the life insurance company shall provide the notice required by subsection (1) of this section to the owner of an individual life insurance policy: (a) When the insured is sixty (60) years of age or older; or (b) If the insurer has been notified that the insured person under the policy is terminally or chronically ill, upon the occurrence of one (1) of the following: 1. The life insurance company receives from the owner a request to surrender, in whole or in part, an individual policy; 2. The life insurance company receives from the owner a request to receive an accelerated death benefit under an individual policy; 3. The life insurance company sends to the owner all notices of lapse of an individual policy; provided, however, that the life insurance company shall not be required to include the notice developed pursuant to subsection (1) of this section to the owner of the policy more than one (1) time within a twelve (12) month period from the date of the first notice of lapse of the policy; or 4. The occurrence of any other event as set forth by the commissioner in administrative regulation. (4) In addition to the conditions set forth in subsection (3) of this section, the commissioner may promulgate administrative regulations to establish that the notice be made only with respect to policies with a net death benefit that is one hundred thousand dollars ($100,000) or greater, if the commissioner finds that this additional condition is in the best interest of the citizens of the Commonwealth and does not discriminate against owners of life insurance policies based on other factors such as race, religion, national origin, age, disability, marital status, or economic means. Effective: July 15, 2010 History: Created 2010 Ky. Acts ch. 25, sec. 5, effective July 15, 2010. Legislative Research Commission Note (7/15/2010). References to the "executive director" of insurance in this section, as created by 2010 Ky. Acts ch. 25, sec. 5, have been changed in codification to the "commissioner" of insurance to reflect the reorganization of certain parts of the Executive Branch, as set forth in Executive Order 2009-535 and confirmed by the General Assembly in 2010 Ky. Acts ch. 24. These changes were made by the Reviser of Statutes pursuant to 2010 Ky. Acts ch. 24, sec. 1938.

KRS 304.15-080 Incontestability

304.15-080. Incontestability (1) There shall be a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of not more than two (2) years after its date of issue, except for nonpayment of premiums, and except, at the insurer's option, as to provisions relating to benefits in the event of total and permanent disability and provisions granting additional benefits specifically against death by accident or accidental means. (2) Any monthly disability income rider attached to a life insurance policy shall contain an incontestability clause as provided under KRS 304.17-060. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 8, effective June 18, 1970.

KRS 304.15-090 Misstatement of age or sex

304.15-090. Misstatement of age or sex There shall be a provision that if the age or sex or both of the insured, or of any other person whose age or sex is considered in determining the premium or benefit, has been misstated, all amounts payable under this policy shall be such as the premium paid would have purchased at the correct age and sex. Such provision may provide that, in the event the age of the insured has been misstated, and if according to the correct age of the insured the coverage provided by the policy would not have become effective or would have ceased prior to acceptance of any premium for a period not covered by the policy, then the liability shall be limited to the refund, upon request, of all premiums paid for the period not covered by the policy. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 9, effective June 18, 1970.

KRS 304.15-100 Dividends

304.15-100. Dividends (1) There shall be a provision in participating policies that, beginning not later than the end of the third policy year, the insurer shall annually ascertain and apportion the divisible surplus, if any, that will accrue on the policy anniversary or other dividend date specified in the policy provided the policy is in force and all premiums to that date are paid. Except as hereinafter provided, any dividend becoming payable shall at the option of the party entitled to elect such option be either: (a) Payable in cash, or (b) Applied to any one (1) of such other dividend options as may be provided by the policy. If any such other dividend options are provided, the policy shall further state which option shall be automatically effective if such party shall not have elected some other option. If the policy specifies a period within which such other dividend option may be elected, such period shall be not less than thirty (30) days following the date on which such dividend is due and payable. The annually apportioned dividend shall be deemed to be payable in cash within the meaning of paragraph (a) of this subsection even though the policy provides that payment of such dividend is to be deferred for a specified period, provided such period does not exceed six (6) years from the date of apportionment and that interest will be added to such dividend at a specified rate. (2) Renewable term policies of ten (10) years or less may provide that the surplus accrued to such policies shall be determined and apportioned each year after the second policy year, and accumulated during each renewal period, and that at the end of the renewal period, on renewal of the policy by the insured, the insurer shall apply the accumulated surplus as an annuity for the next succeeding renewal term in the reduction of premiums. (3) In participating industrial life insurance policies, in lieu of the provision required in subsection (1) of this section, there shall be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually in the divisible surplus, if any, in the manner set forth in the policy. (4) This section does not apply as to insurance issued in consideration of lapsed or surrendered policies. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 10, effective June 18, 1970.

KRS 304.15-110 Policy loans

304.15-110. Policy loans (1) There shall be a provision that after three (3) full years' premiums have been paid and after the policy has a cash surrender value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment or pledge of the policy and on the sole security thereof, at a specified rate of interest, an amount equal to or, at the option of the party entitled thereto, less than the loan value of the policy. The loan value of the policy shall be at least equal to the cash surrender value at the end of the then current policy year, and the insurer may deduct, either from such loan value or from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value including any interest then accrued but not due, any unpaid balance of the premium for the current policy year, and interest on the loan to the end of the current policy year. The policy may also provide that if interest on any indebtedness is not paid when due, it shall then be added to the existing indebtedness and shall bear interest at the same rate, and that if and when the total indebtedness on the policy, including interest due, or accrued, equals or exceeds the amount of the loan value thereof, then the policy shall terminate and become void, but not until at least thirty (30) days after notice has been mailed by the insurer to the last address of record with the insurer, of the insured or other policy owner and of any assignee of record at the insurer's principal office. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for six (6) months after application therefor. The policy, at the insurer's option, may provide for automatic premium loan. (2) This section shall not apply to term policies, or to term insurance benefits provided by rider or supplemental policy provisions or to industrial life insurance policies. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 11, effective June 18, 1970.

KRS 304.15-115 Life insurance policy loan interest rates

304.15-115. Life insurance policy loan interest rates (1) As used in this section: (a) "Policy" includes annuity contracts as defined in KRS 304.5-030 which provide for policy loans, and certificates issued by a fraternal benefit society as defined in KRS 304.29-011; (b) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer; (c) "Policy loan" includes an advance of cash as specified in KRS 304.15-110 and any premium loan made under a policy to pay one (1) or more premiums that were not paid to the life insurer as they fell due; and (d) "Published monthly average" means Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc. or any successor thereto, or, in the event that Moody's Corporate Bond Yield Average - Monthly Average Corporates is no longer published, a substantially similar average prescribed by the commissioner. (2) Notwithstanding any other provision of law: (a) Policies issued on or after July 13, 1984, shall contain either, but not both, of the following policy loan interest rate provisions: 1. A provision permitting a maximum interest rate of not more than eight percent (8%) per annum; or 2. A provision permitting an adjustable maximum interest rate established at regular intervals by the life insurer as permitted by law; (b) The rate of interest charged on a policy loan made under paragraph (a)2. of this subsection shall not exceed eighteen percent (18%) nor the higher of the following: 1. The published monthly average for the calendar month ending two (2) months before the date on which the rate is determined; or 2. The rate used to compute cash surrender values under the policy during the applicable period plus one percent (1%) per annum; (c) If the maximum rate of interest is determined pursuant to paragraph (a)2. of this subsection, the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy; (d) The maximum rate for each policy shall be determined at regular intervals at least once every twelve (12) months, but not more frequently than once in any three (3) month period. At the intervals specified in the policy: 1. The rate being charged may be increased whenever such increase as determined under paragraph (b) of this subsection would increase the rate by one-half of one percent (0.5%) or more per annum; 2. The rate being charged shall be reduced whenever such reduction as determined under paragraph (b) of this subsection would decrease that rate by one-half of one percent (0.5%) or more per annum; (e) The life insurer shall: 1. Notify the policyholder at the time an advance of cash is made of the initial rate of interest on the loan; 2. Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in subparagraph 3. of this paragraph; 3. Send to policyholders with loans reasonable advance notice of any increase in the rate; and 4. Include in the notices required in subparagraphs 1., 2., and 3. of this paragraph the substance of the pertinent provisions of paragraphs (a) and (c) of this subsection; (f) The loan value of the policy shall be determined in accordance with KRS 304.15-110, but no policy shall terminate in a policy year as the sole result of changes in the interest rate during that policy year. The life insurer shall maintain coverage during that policy year until such time at which it would otherwise have terminated if there had been no change during that policy year; (g) The substance of the pertinent provisions of paragraphs (a) and (c) of this subsection shall be set forth in the policies to which they apply; (h) For the purposes of this section, the rate of interest on policy loans permitted under this section shall include the interest rate charged for reinstatement of policy loans for the period during and after any lapse of a policy; and (i) No other provision of law shall apply to policy loan interest rates unless such provision specifically applies to such rates. (3) The provisions of this section shall not apply to any policy issued before July 13, 1984, unless the policyholder agrees in writing to the applicability of such provisions. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1178, effective July 15, 2010. -- Amended 1988 Ky. Acts ch. 310, sec. 39, effective January 1, 1989. -- Created 1984 Ky. Acts ch. 265, sec. 1, effective July 13, 1984.

KRS 304.15-120 Table of installments

304.15-120. Table of installments In case the policy provides that the proceeds may be payable in installments which are determinable at issue of the policy, there shall, except as otherwise permitted by the commissioner, be a table showing the amounts of the guaranteed installments. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1179, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 12, effective June 18, 1970.

KRS 304.15-130 Reinstatement

304.15-130. Reinstatement There shall be a provision that, unless the policy has been surrendered for its cash surrender value, or its cash surrender value has been exhausted, the policy will be reinstated at any time within three (3) years (or two (2) years in the case of industrial life insurance policies) from the date of premium default upon written application therefor, the production of evidence of insurability satisfactory to the insurer, the payment of all premiums in arrears and the payment or reinstatement of any other indebtedness to the insurer upon the policy, all with interest at the rate specified. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 13, effective June 18, 1970.

KRS 304.15-140 Repealed, 1994

304.15-140. Repealed, 1994 Catchline at repeal: Payment of claims. History: Repealed 1994 Ky. Acts ch. 93, sec. 22, effective July 15, 1994. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 14, effective June 18, 1970.

KRS 304.15-150 Beneficiary, industrial policies

304.15-150. Beneficiary, industrial policies An industrial life insurance policy shall have the name of the beneficiary designated thereon or in the application or other form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the issuance of the policy, unless such beneficiary be irrevocably designated. The policy may also provide that no designation or change of beneficiary shall be binding on the insurer until indorsed on the policy by the insurer, and that the insurer may refuse to indorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured. The policy may also provide that if the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than thirty (30) days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies before the insured, or is not legally competent to give a valid release, then the insurer may make any payment thereunder to the executor or administrator of the insured, or to any relative of the insured by blood or legal adoption or connection by marriage, or to any person appearing to the insurer to be equitably entitled thereto by reason of having been named beneficiary, or by reason of having incurred expense for the maintenance, medical attention or burial of the insured. The policy may also include a similar provision applicable to any other payment due under the policy. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 15, effective June 18, 1970.

KRS 304.15-160 Title

304.15-160. Title There shall be a title on the policy, briefly describing the same. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 16, effective June 18, 1970.

KRS 304.15-170 Excluded or restricted coverage

304.15-170. Excluded or restricted coverage A clause in any policy of life insurance providing that such policy shall be incontestable after a specified period shall preclude only a contest of the validity of the policy, and shall not preclude the assertion at any time of defenses based upon provisions in the policy which exclude or restrict coverage, whether or not such restrictions or exclusions are excepted in such clause. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 17, effective June 18, 1970.

KRS 304.15-175 Repealed, 2019

304.15-175. Repealed, 2019 Catchline at repeal: Notice by insurer of paid-up life insurance policy. History: Repealed 2019 Ky. Acts ch. 166, sec. 5, effective June 27, 2019. -- Amended 2010 Ky. Acts ch. 24, sec. 1180, effective July 15, 2010. -- Created 2008 Ky. Acts ch. 142, sec. 1, effective July 15, 2008.

KRS 304.15-180 Standard provisions -- Annuity and pure endowment contracts

304.15-180. Standard provisions -- Annuity and pure endowment contracts (1) No annuity or pure endowment contract, other than reversionary annuities (also called survivorship annuities) or group annuities and except as stated herein, shall be delivered or issued for delivery in this state unless it contains in substance each of the provisions specified in KRS 304.15-190 to 304.15-240, inclusive. Any of such provisions not applicable to single premium annuities or single premium pure endowment contracts shall not, to that extent, be incorporated therein. (2) This section shall not apply to contracts for deferred annuities included in, or upon the lives of beneficiaries under, life insurance policies. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 18, effective June 18, 1970.

KRS 304.15-190 Grace period -- Annuities

304.15-190. Grace period -- Annuities In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision that there shall be a period of grace of one (1) month, but not less than thirty (30) days, within which any stipulated payment to the insurer falling due after the first may be made, subject, at the option of the insurer, to an interest charge thereon at a rate to be specified in the contract for the number of days of grace elapsing before such payment, during which period of grace the contract shall continue in full force; but in case a claim arises under the contract on account of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of the current contract year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted from any amount payable under the contract in settlement. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 19, effective June 18, 1970.

KRS 304.15-200 Incontestability -- Annuities

304.15-200. Incontestability -- Annuities If any statements, other than those relating to age, sex and identity are required as a condition to issuing an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, and subject to KRS 304.15-220, there shall be a provision that the contract shall be incontestable after it has been in force during the lifetime of the person or of each of the persons as to whom such statements are required, for a period of two (2) years from its date of issue, except for nonpayment of stipulated payments to the insurer; and, at the option of the insurer, such contract may also except any provisions relative to benefits in the event of disability and any provisions which grant insurance specifically against death by accident or accidental means. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 20, effective June 18, 1970.

KRS 304.15-210 Entire contract -- Annuities

304.15-210. Entire contract -- Annuities In an annuity or pure endowment contract, other than a reversionary, survivorship, or group annuity, there shall be a provision that the contract shall constitute the entire contract between the parties or, if a copy of the application is indorsed upon or attached to the contract when issued, a provision that the contract and the application therefor shall constitute the entire contract between the parties. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 21, effective June 18, 1970.

KRS 304.15-220 Misstatement of age or sex -- Annuities

304.15-220. Misstatement of age or sex -- Annuities In an annuity or pure endowment contract, other than a reversionary, survivorship, or group annuity, there shall be a provision that if the age or sex of the person or persons upon whose life or lives the contract is made, or of any of them has been misstated, the amount payable or benefits accruing under the contract shall be such as the stipulated payment or payments to the insurer would have purchased according to the correct age or sex and that if the insurer shall make or has made any overpayment or overpayments on account of any such misstatement, the amount thereof with interest at the rate specified in the contract may be charged against the current or next succeeding payment or payments to be made by the insurer under the contract. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 22, effective June 18, 1970.

KRS 304.15-230 Dividends -- Annuities

304.15-230. Dividends -- Annuities If an annuity or pure endowment contract, other than a reversionary, survivorship, or group annuity, is participating, there shall be a provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the contract. Effective: June 81, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 23, effective June 18, 1970.

KRS 304.15-240 Reinstatement -- Annuities

304.15-240. Reinstatement -- Annuities In an annuity or pure endowment contract, other than a reversionary or group annuity, there shall be a provision that the contract may be reinstated at any time within one (1) year from the default in making stipulated payments to the insurer, unless the cash surrender value has been paid, but all overdue stipulated payments and any indebtedness to the insurer on the contract shall be paid or reinstated with interest thereon at a rate specified in the contract, and in cases where applicable the insurer may also include a requirement of evidence of insurability satisfactory to the insurer. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 24, effective June 18, 1970.

KRS 304.15-250 Standard provisions -- Reversionary annuities

304.15-250. Standard provisions -- Reversionary annuities (1) Except as stated herein, no contract for a reversionary annuity shall be delivered or issued for delivery in this state unless it contains in substance each of the following provisions: (a) Any such reversionary annuity contract shall contain the provisions specified in KRS 304.15-190 to 304.15-230, inclusive, except that under KRS 304.15- 190, the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement of an overdue payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the contract. (b) In such reversionary annuity contracts there shall be a provision that the contract may be reinstated at any time within three (3) years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability satisfactory to the insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of the contract be paid, or, within the limits permitted by the then cash values of the contracts, reinstated, with the interest as to both payments and indebtedness at a rate specified in the contract. (2) This section shall not apply to group annuities or to annuities included in life insurance policies, and any of such provisions not applicable to single premium annuities shall not to that extent be incorporated therein. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 25, effective June 18, 1970.

KRS 304.15-260 Limitation of liability

304.15-260. Limitation of liability (1) No policy of life insurance shall be delivered or issued for delivery in this state if it contains any of the following provisions: (a) A provision limiting the time within which an action at law or in equity may be commenced on such a policy to less than three (3) years after the cause of action has accrued; or (b) A provision which excludes or restricts liability for death caused in a certain specified manner or occurring while the insured has a specified status, except that a policy may contain provisions excluding or restricting coverage as specified therein in the event of death under any one (1) or more of the following circumstances: 1. Death as a result, directly or indirectly, of war, declared or undeclared, or of action by military forces, or of any act or hazard of such war or action, or of service in the military, naval, or air forces or in civilian forces auxiliary thereto, or from any cause while a member of such military, naval, or air forces of any country at war, declared or undeclared, or of any country engaged in such military action; 2. Death as a result of aviation or any air travel or flight; 3. Death as a result of specified hazardous occupation or occupations; 4. Death while the insured is a resident outside the continental United States and Canada; or 5. Death within two (2) years from the date of issue of the policy as a result of suicide, while sane or insane. (2) A policy which contains any exclusion or restriction pursuant to paragraph (b) of subsection (1) of this section, shall also provide that in the event of death under the circumstances to which any such exclusion or restriction is applicable, the insurer will pay an amount not less than a reserve determined according to the commissioners reserve valuation method upon the basis of the mortality table and interest rate specified in the policy for the calculation of nonforfeiture benefits (or if the policy provides for no such benefits, computed according to a mortality table and interest rate determined by the insurer and specified in the policy) with adjustment for indebtedness or dividend credit. (3) This section shall not apply to group life insurance, health insurance, reinsurance, or annuities, or to any provision in a life insurance policy or contract supplemental thereto relating to disability benefits or to additional benefits in the event of death by accident or accidental means. (4) Nothing contained in this section shall prohibit any provision which in the opinion of the commissioner is more favorable to the policyholder than a provision permitted by this section. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1181, effective July 15, 2010. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 26, effective June 18, 1970.

KRS 304.15-270 Incontestability, limitation of liability after reinstatement

304.15-270. Incontestability, limitation of liability after reinstatement (1) A reinstated policy of life insurance or annuity contract may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period following reinstatement and with the same conditions and exceptions as the policy provides with respect to contestability after original issuance. (2) When any life insurance policy or annuity contract is reinstated, such reinstated policy or contract may exclude or restrict liability to the same extent that such liability could have been or was excluded or restricted when the policy or contract was originally issued, and such exclusion or restriction shall be effective from the date of reinstatement. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 27, effective June 18, 1970.

KRS 304.15-280 Prohibited provisions

304.15-280. Prohibited provisions (1) No life insurance policy, other than industrial life insurance, shall be delivered or issued for delivery in this state, if it contains any of the following provisions: (a) A provision by which the policy purports to be issued or to take effect more than one (1) year before the original application for the insurance was made. (b) A provision for any mode of settlement at maturity of the policy of less value than the amount insured under the policy, plus dividend additions, if any, less any indebtedness to the insurer on or secured by the policy and less any premium that may by the terms of the policy be deducted. (c) A provision to the effect that the agent soliciting the insurance is the agent of the person insured under the policy, or making the acts or representations of such agents binding upon the person so insured under the policy. (2) No industrial life insurance policy shall be delivered or issued for delivery in this state if it contains any of the following provisions: (a) A provision by which the insurer may deny liability under the policy for the reason that the insured has previously obtained other insurance from the same insurer. (b) A provision giving the insurer the right to declare the policy void because the insured has had any disease or ailment, whether specified or not, or because the insured has received institutional, hospital, medical or surgical treatment or attention, except a provision which gives the insurer the right to declare the policy void, either before or after claim, if before the date of issue of the policy the insured had any one (1) or more of such serious diseases or ailments as is specified in such provision, or if the insured has, within two (2) years prior to the issuance of the policy, received institutional, hospital, medical or surgical treatment or attention and if the insured or claimant under the policy fails to show, by the clear preponderance of the evidence, that the specified disease or ailment, or the condition occasioning such treatment or attention, was not material to the risk. (c) A provision giving the insurer the right to declare the policy void because the insured has been rejected for insurance, unless such right be conditioned upon a showing by the insurer that knowledge of such rejection would have led to a refusal by the insurer to make such contract. (3) No insurer shall provide in any policy, certificate, contract or agreement of life insurance for the payment of any insurance, indemnity or benefit in services, goods, wares or merchandise of any kind. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 28, effective June 18, 1970.

KRS 304.15-290 Provisions required by law of other jurisdiction

304.15-290. Provisions required by law of other jurisdiction The policies of a foreign life insurer may contain any provision which the law of the state, territory, district, or country under which the insurer is organized prescribes shall be in such policies when issued in this state, and the policies of a domestic life insurer may, when issued or delivered in any other state, territory, district, or country, contain any provisions required by the laws thereof, anything in this subtitle to the contrary notwithstanding. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 29, effective June 18, 1970.

KRS 304.15-300 Short title

304.15-300. Short title KRS 304.15-310 to 304.15-360, shall be known as the "Standard Nonforfeiture Law for Life Insurance." Effective: June 17, 1978 History: Amended 1978 Ky. Acts ch. 280, sec. 8, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 30, effective June 18, 1970.

KRS 304.15-310 Nonforfeiture provisions

304.15-310. Nonforfeiture provisions (1) No policy of life insurance, except as stated in KRS 304.15-360 shall be delivered or issued for delivery in this state unless it shall contain, in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements hereinafter specified and are essentially in compliance with KRS 304.15-352: (a) Paid-up nonforfeiture benefit. That, in the event of default in any premium payment, the insurer will grant, upon proper request not later than sixty (60) days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such amount as may be hereinafter specified. In lieu of such stipulated paid-up nonforfeiture benefit, the insurer may substitute, upon proper request not later than sixty (60) days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits; (b) Cash surrender value. That, upon surrender of the policy within sixty (60) days after the due date of any premium payment in default after premiums have been paid for at least three (3) full years in the case of ordinary insurance or five (5) full years in the case of industrial insurance, the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter specified; (c) Effective date of benefit. That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than sixty (60) days after the due date of the premium in default; (d) Cash surrender value if policy paid up. That, if the policy shall have become paid up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the insurer will pay, upon surrender of the policy within thirty (30) days after any policy anniversary, a cash surrender value of such amount as may be hereinafter specified; (e) Mortality table and interest rate used. In the case of policies which cause, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of all other policies, statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefits, if any, available under the policy on each policy anniversary either during the first twenty (20) policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the insurer on the policy; and (f) Method used in computing value and benefit. A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the insurer on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered; and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy. (2) Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy. (3) The insurer shall reserve the right to defer the payment of any cash surrender value for a period of six (6) months after demand therefor with surrender of the policy. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1182, effective July 15, 2010. -- Amended 1982 Ky. Acts ch. 263, sec. 1, effective July 15, 1982. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 31, effective June 18, 1970.

KRS 304.15-311 "Operative date of the valuation manual" defined

304.15-311. "Operative date of the valuation manual" defined The term "operative date of the valuation manual" means January 1 of the first calendar year that the valuation manual is operative, as defined in KRS 304.6-131(11). Effective: June 24, 2015 History: Created 2015 Ky. Acts ch. 57, sec. 15, effective June 24, 2015.

KRS 304.15-312 Policies without cash surrender value

304.15-312. Policies without cash surrender value (1) Notwithstanding the provisions of KRS 304.15-310(1)(b) and (d), companies which comply with the provisions of KRS 304.15-342 may issue policies of life insurance which differ from their existing or currently filed policies only in that they do not provide for any cash surrender value prior to the death of the life insured. However, if a policy provides for any cash surrender value, endowment, or pure endowment prior to the death of the life insured, this exemption shall not apply. Provided, further, that any policy without cash surrender values, for which one (1) or more cash surrender values would otherwise have been required, shall contain on its first page, a concise, exact description, set out in contrasting type at least four (4) points larger than used in the body of that page a statement in a prominent place that such values are not provided and that no policy loans are available under the policy. Further, the insurer shall provide to each prospective purchaser of such a policy a policy summary, the form of which shall be filed for approval pursuant to KRS 304.14-120, which includes the same description as the policy, similarly displayed, and which shows the premium said insurer charges for the same policy when cash values are included. Such policy summary shall be delivered before any premium is accepted. (2) Such policies shall provide for a paid-up nonforfeiture benefit as required by KRS 304.15-310(1)(a) and (c). The amount or period of any paid-up nonforfeiture benefit shall be determined from a nonforfeiture amount determined as provided by KRS 304.15-330 for an otherwise similar policy with cash surrender values. The nonforfeiture amount, at any time, shall not be less than the amount of the minimum cash surrender value required by KRS 304.15-320 for an otherwise similar policy with cash surrender values. (3) Except for the requirement of payment upon surrender, the nonforfeiture amounts for such policies shall be subject to all provisions of this subtitle which apply to the cash surrender values of otherwise similar life insurance policies with cash surrender values. (4) KRS 304.15-110 shall not apply to policies which do not provide cash surrender values. Effective: July 15, 1986 History: Created 1986 Ky. Acts ch. 256, sec. 1, effective July 15, 1986.

KRS 304.15-315 Standard Nonforfeiture Law for Individual Deferred Annuities

304.15-315. Standard Nonforfeiture Law for Individual Deferred Annuities (1) This section shall be known as the "Standard Nonforfeiture Law for Individual Deferred Annuities." (2) This section shall not apply to any reinsurance group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this state through an agent or other representative of the insurer issuing the contract. However, to the extent that a variable annuity contract provides benefits that do not, before the maturity date, vary in accordance with the investment performance of any separate account or accounts maintained by the insurer as to such contract, as provided for in KRS 304.15-390, the contract shall contain provisions that satisfy the requirements of this section and shall not otherwise be subject to this section. (3) In the case of contracts issued on or after the operative date of this section as defined in subsection (12) of this section, no contract of annuity, except as stated in subsection (2) of this section, shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract. (a) That upon cessation of payment of considerations under a contract, the insurer will grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in subsections (5), (6), (7), (8), and (10) of this section. (b) If a contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the insurer will pay in lieu of any paid-up annuity benefit a cash surrender benefit of such amount as is specified in subsections (5), (6), (8), and (10) of this section. The insurer shall reserve the right to defer the payment of such cash surrender benefit for a period of six (6) months after demand therefor with surrender of the contract. (c) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of such benefits. (d) A statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the insurer to the contract, any indebtedness to the insurer on the contract or any prior withdrawals from or partial surrenders of the contract. Notwithstanding the requirements of this subsection, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of two (2) full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to such period would be less than twenty dollars ($20) monthly, the insurer may at its option terminate such contract by payment in cash of the then present value of such portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by such payment shall be relieved of any further obligation under such contract. (4) The minimum values as specified in subsections (5), (6), (7), (8), and (10) of this section of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section. (a) With respect to contracts providing for flexible considerations, the minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest of three percent (3%) per annum of percentages of the net considerations (as hereinafter defined) paid prior to such time, decreased by the sum of: 1. Any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest of three percent (3%) per annum; and 2. The amount of any indebtedness to the insurer on the contract, including interest due and accrued; and increased by any existing additional amounts credited by the insurer to the contract. The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount not less than zero and shall be equal to the corresponding gross consideration credited to the contract during that contract year less an annual contract charge of thirty dollars ($30) and less a collection charge of one dollar and twenty-five cents ($1.25) per consideration credited to the contract during that contract year. The percentages of net considerations shall be sixty-five percent (65%) of the net consideration for the first contract year and eighty-seven and one-half percent (87.5%) of the net considerations for the second and later contract years. Notwithstanding the provisions of the preceding sentence, the percentage shall be sixty-five percent (65%) of the portion of the total net consideration for any renewal contract year which exceeds by not more than two (2) times the sum of those portions of the net considerations in all prior contract years for which the percentage was sixty-five percent (65%). (b) Notwithstanding any other provision of this subsection, for any contract issued on or after July 1, 2003, and before July 1, 2006, the interest rate at which net considerations, prior withdrawals, and partial surrenders shall be accumulated for the purpose of determining nonforfeiture amounts shall be no less than one and one-half percent (1.5%) per annum. (c) With respect to contracts providing for fixed scheduled considerations, minimum nonforfeiture amounts shall be calculated on the assumption that considerations are paid annually in advance and shall be defined as for contracts with flexible considerations which are paid annually with two (2) exceptions: 1. The portion of the net consideration for the first contract year to be accumulated shall be the sum of sixty-five percent (65%) of the net consideration for the first contract year plus twenty-two and one-half percent (22.5%) of the excess of the net consideration for the first contract year over the lesser of the net considerations for the second and third contract years; and 2. The annual contract charge shall be the lesser of, a. Thirty dollars ($30), or b. Ten percent (10%) of the gross annual consideration. (d) With respect to contracts providing for a single consideration, minimum nonforfeiture amounts shall be defined as for contracts with flexible considerations except that the percentage of net consideration used to determine the minimum nonforfeiture amount shall be equal to ninety percent (90%) and the net consideration shall be the gross consideration less a contract charge of seventy-five dollars ($75). (5) Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Such present value shall be computed using the mortality table, if any, and the interest rate specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract. (6) For contracts which provide cash surrender benefits, such cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than one percent (1%) higher than the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, decreased by the amount of any indebtedness to the insurer on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the insurer to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such contracts shall be at least equal to the cash surrender benefit. (7) For contracts which do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, and increased by any existing additional amounts credited by the insurer to the contract. For contracts which do not provide any death benefits prior to the commencement of any annuity payments, such present values shall be calculated on the basis of such interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time. (8) For the purpose of determining the benefits calculated under subsections (6) and (7) of this section, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later. (9) Any contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not provided. (10) Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs. (11) For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of subsections (5), (6), (7), (8), and (10) of this section, additional benefits payable: (a) In the event of total and permanent disability; (b) As reversionary annuity or deferred reversionary annuity benefits; or (c) As other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits; shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits that may be required by this section. The inclusion of such additional benefits shall not be required in any paid-up benefits, unless such additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits. (12) (a) 1. After August 1, 2005, any insurer may file with the commissioner a written notice of its election to apply the provisions of KRS 304.15-365 on a contract-form by contract-form basis to annuity contracts issued by the insurer during the period from the date of the election through June 30, 2006; 2. In all other instances, insurers shall apply the provisions of KRS 304.15- 315 to annuity contracts issued through June 30, 2006; and (b) Insurers shall apply the provisions of KRS 304.15-365 to all annuity contracts issued on or after July 1, 2006. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1183, effective July 15, 2010. -- Amended 2005 Ky. Acts ch. 47, sec. 2, effective June 20, 2005. -- Amended 2003 Ky. Acts ch. 55, sec. 1, effective June 24, 2003. -- Created 1978 Ky. Acts ch. 40, sec. 1, effective June 17, 1978.

KRS 304.15-320 Cash surrender value

304.15-320. Cash surrender value Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by KRS 304.15-310, shall be an amount not less than the excess, if any, of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of: (1) The then present value of the adjusted premiums as defined in KRS 304.15-340 and 304.15-342, corresponding to premiums which would have fallen due on and after such anniversary, and (2) The amount of any indebtedness to the insurer on the policy; provided, however, that for any policy issued on or after the effective date of KRS 304.15-342 as defined therein, which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value shall be an amount not less than the sum of the cash surrender value for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision. Provided, further, that for any family policy issued on or after the effective date of KRS 304.15-342 as defined therein, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse's age seventy-one (71), the cash surrender value shall be an amount not less than the sum of the cash surrender value for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse and the cash surrender value for a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse. Any cash surrender value available within thirty (30) days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit whether or not required by KRS 304.15-310 shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on the policy. Effective: July 15, 1982 History: Amended 1982 Ky. Acts ch. 263, sec. 2, effective July 15, 1982. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 32, effective June 18, 1970.

KRS 304.15-322 Notification of insured of cash surrender value

304.15-322. Notification of insured of cash surrender value Within three (3) months after default of any premium payment on any life insurance policy which has a cash surrender value, the insurer shall notify the insured in writing of the cash surrender value and of the insured's options as to the application of the cash surrender value as provided in the policy. Effective: July 15, 1980 History: Created 1980 Ky. Acts ch. 32, sec. 1, effective July 15, 1980.

KRS 304.15-330 Paid-up nonforfeiture benefits

304.15-330. Paid-up nonforfeiture benefits Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by KRS 304.15-310 to 304.15-360, inclusive, in the absence of the condition that premiums shall have been paid for at least a specified period. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 33, effective June 18, 1970.

KRS 304.15-340 Adjusted premiums

304.15-340. Adjusted premiums (1) How calculated. This section shall not apply to policies issued on or after the operative date of KRS 304.15-342 as defined therein. Except as provided in subsection (4) of this section, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairment or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of: (a) The then present value of the future guaranteed benefits provided for by the policy; (b) Two percent (2%) of the amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with duration of the policy; (c) Forty percent (40%) of the adjusted premium for the first policy year; and (d) Twenty-five percent (25%) of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. (2) In applying the percentages specified in paragraphs (c) and (d) of subsection (1) of this section, no adjusted premium shall be deemed to exceed four percent (4%) of the amount of insurance or uniform amount equivalent thereto. Whenever the plan or term of a policy has been changed, either by request of the insured or automatically in accordance with the provisions of the policy, the date of issue of the changed policy for the purposes of determining a nonforfeiture benefit or cash surrender value shall be the date as of which the age of the insured is determined for the purposes of the changed policy. The date of issue of a policy for the purpose of this section shall be the date as of which the rated age of the insured is determined. (3) In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of this section shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy; provided that in the case of a policy providing a varying amount of insurance issued on the life of a child under age ten (10), the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten (10) were the amount provided by such policy at age ten (10). (4) The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to: (a) The adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (b) The adjusted premiums for such term insurance, paragraphs (a) and (b) of this subsection being calculated separately and as specified in subsections (1), (2) and (3) of this section, except that, for the purposes of paragraphs (b), (c), and (d) of subsection (1) of this section, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in paragraph (b) of this subsection shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in paragraph (a) of this subsection. (5) All adjusted premiums and present values referred to in KRS 304.15-310 to 304.15- 360, inclusive, but not including KRS 304.15-342 and 304.15-344 shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality Table, provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six (6) years younger than the actual age of the insured, and such calculations for all policies of industrial insurance shall be made on the basis of the Commissioners 1961 Standard Industrial Mortality Table. All calculations shall be made on the basis of the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits provided that such rate of interest shall not exceed four percent (4%) per year except that a rate of interest not exceeding five and one-half percent (5.5%) per year may be used for policies issued on or after June 17, 1978. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit for ordinary insurance, the rates of mortality assumed may not be more than those shown in the Commissioners 1958 Extended Term Insurance Table and for industrial insurance the rates of mortality may not be more than those shown in the Commissioners 1961 Industrial Extended Term Insurance Table. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the insurer and approved by the commissioner. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1184, effective July 15, 2010. -- Amended 1982 Ky. Acts ch. 263, sec. 3, effective July 15, 1982. -- Amended 1978 Ky. Acts ch. 280, sec. 9, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 34, effective June 18, 1970.

KRS 304.15-342 Adjusted premiums operative at option of insurer or on January 1, 1989

304.15-342. Adjusted premiums operative at option of insurer or on January 1, 1989 (1) This section shall apply to all policies issued on or after the effective date of this section as defined in subsection (11) of this section. Except as provided in subsection (7) of this section, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of: (a) The then present value of the future guaranteed benefits provided for by the policy; (b) One percent (1%) of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years; and (c) One hundred twenty-five percent (125%) of the nonforfeiture net level premium as hereinafter defined. Provided, however, that in applying the percentage specified in (c) above, no nonforfeiture net level premium shall be deemed to exceed four percent (4%) of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years. This date of issue of a policy for the purpose of this section shall be the date as of which the rated age of the insured is determined. (2) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one (1) per annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due. (3) In the case of policies which cause, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums the future adjusted premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change. (4) Except as otherwise provided in subsection (7) of this section, the recalculated future adjusted premiums for any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all such future adjusted premiums shall be equal to the excess of (a) the sum of the then present value of the then future guaranteed benefits provided for by the policy and the additional expense allowance, if any, over (b) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy. (5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum of: (a) One percent (1%) of the excess, if positive, of the average amount of insurance at the beginning of each of the first ten (10) policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first ten (10) policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (b) One hundred twenty-five percent (125%) of the increase, if positive, in the nonforfeiture net level premium. (6) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (a) by (b) where: (a) Equals the sum of: 1. The nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one (1) per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred, and 2. The present value of the increase in future guaranteed benefits provided for by the policy, and (b) Equals the present value of an annuity of one (1) per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due. (7) Notwithstanding any other provisions of this section to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, such policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis. (8) All adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of the commissioners 1980 standard ordinary mortality table or at the election of the insurer for any one (1) or more specified plans of life insurance, the commissioners 1980 standard ordinary mortality table with ten-year select mortality factors; shall for all policies of industrial insurance be calculated on the basis of the commissioners 1961 standard industrial mortality table; and shall for all policies issued in a particular calendar year be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this section for policies issued in that calendar year. Provided, however, that: (a) At the option of the insurer, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this section, for policies issued in the immediately preceding calendar year; (b) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by KRS 304.15-310, shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any; (c) Any insurer may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values; (d) In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners 1980 extended term insurance table for policies of ordinary insurance and not more than the commissioners 1961 industrial extended term insurance table for policies of industrial insurance; (e) For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriate modifications of the aforementioned tables; (f) For policies issued prior to the operative date of the valuation manual, any Commissioner's Standard ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the commissioners 1980 standard ordinary mortality table with or without ten-year select mortality factors or for the commissioners 1980 extended term insurance table; (g) For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners' Standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners' 1980 Standard Ordinary Mortality Table, with or without Ten-Year Select Mortality Factors, or for the Commissioners' 1980 Extended Term Insurance Table. If the commissioner promulgates an administrative regulation adopting any Commissioners' Standard ordinary mortality table, adopted by the NAIC, for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual; (h) For policies issued prior to the operative date of the valuation manual, any Commissioners' Standard industrial mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the commissioner for use in determining the minimum nonforfeiture standard may be substituted for the commissioners 1961 standard industrial mortality table or the commissioners 1961 industrial extended term insurance table; and (i) For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners' Standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners' 1961 Standard Industrial Mortality Table or the Commissioners' 1961 Industrial Extended Term Insurance Table. If the commissioner promulgates an administrative regulation adopting the Commissioners' Standard industrial mortality table as adopted by the NAIC, for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual. (9) (a) For policies issued prior to the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to one hundred twenty-five percent (125%) of the calendar year statutory valuation interest rate for such policy as defined in KRS 304.6-130 to 304.6-180, inclusive to the nearer one quarter of one percent (0.25%), except that the nonforfeiture interest rate shall not be less than four percent (4%). (b) For policies issued on or after the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be provided by the valuation manual. (10) Notwithstanding any other provision in this code to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form. (11) Any insurer may file with the commissioner a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1989, which shall be the effective date of this section for such insurer. If an insurer makes no such election, the effective date of this section for such insurer shall be January 1, 1989. Effective: June 24, 2015 History: Amended 2015 Ky. Acts ch. 57, sec. 16, effective June 24, 2015. -- Amended 2010 Ky. Acts ch. 24, sec. 1185, effective July 15, 2010. -- Created 1982 Ky. Acts ch. 263, sec. 4, effective July 15, 1982.

KRS 304.15-344 Commissioner's approval

304.15-344. Commissioner's approval (1) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in KRS 304.15-310 to 304.15-340 and in KRS 304.15-342, then: (a) The commissioner must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by KRS 304.15-310 to 304.15-360 herein; (b) The commissioner must be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insureds; (c) The cash surrender values and paid-up nonforfeiture benefits provided by such plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of KRS 304.15-310 to 304.15-360, as determined by regulations promulgated by the commissioner. (d) Notwithstanding any other provision in the laws of this state, any policy, contract or certificate providing life insurance under any such plan must be affirmatively approved by the commissioner before it can be marketed, issued, delivered or used in this state. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1186, effective July 15, 2010. -- Created 1982 Ky. Acts ch. 263, sec. 5, effective July 15, 1982.

KRS 304.15-350 Calculation of cash surrender value and paid-up nonforfeiture benefit of certain policies on default

304.15-350. Calculation of cash surrender value and paid-up nonforfeiture benefit of certain policies on default (1) Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in KRS 304.15-320 to 304.15-340 and in KRS 304.15-342, may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid- up term additions, shall be not less than the amounts used to provide such additions. Notwithstanding KRS 304.15-320, additional benefits payable: (a) In the event of death or dismemberment by accident or accidental means; (b) In the event of total and permanent disability; (c) As reversionary annuity or deferred reversionary annuity benefits; (d) As term insurance benefits provided by a rider or supplemental policy provisions to which, if issued as a separate policy, KRS 304.15-310 to 304.15- 360, inclusive, would not apply; (e) As term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child's age is twenty-six (26), and is uniform in amount after the child's age is one (1); (f) As other policy benefits additional to life insurance and endowment benefits; and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by KRS 304.15-310 to 304.15-360, inclusive, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits. (2) Contrary provisions. Any condition or stipulation in the policy of insurance or elsewhere contrary to the provisions of KRS 304.15-310 to 304.15-360, and any waiver of such provisions by the insured, shall be void. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 166, sec. 7, effective July 15, 2010. -- Amended 1982 Ky. Acts ch. 263, sec. 6, effective July 15, 1982. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 35, effective June 18, 1970.

KRS 304.15-352 Cash surrender value -- Nonforfeiture factor

304.15-352. Cash surrender value -- Nonforfeiture factor (1) This section, in addition to all other applicable sections of KRS 304.15-310 to 304.15-360, shall apply to all policies issued on or after January 1, 1986. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be in an amount which does not differ by more than two-tenths of one percent (0.2%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years, from the sum of the greater of zero (0) and the basic cash value hereinafter specified and the present value of any existing paid-up additions less the amount of any indebtedness to the insurer under the policy. (2) The basic cash value shall be equal to the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the insurer, if there had been no default, less the then present value of the nonforfeiture factors, as hereinafter defined, corresponding to premiums which would have fallen due on and after such anniversary. Provided, however, that the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in KRS 304.15-320, 304.15-340, or 304.15-342 is applicable, shall be the same as are the effects specified in KRS 304.15-320, 304.15-340, or 304.15-342, whichever is applicable, on the cash surrender values defined in that section. (3) The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in KRS 304.15- 340 or 304.15-342, whichever is applicable. Except as required in this subsection, such percentage: (a) Must be the same percentage for each policy year between the second policy anniversary and the later of the fifth policy anniversary and the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two-tenths of one percent (0.2%) of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten (10) policy years; and (b) Must be such that no percentage after the later of the two (2) policy anniversaries specified in paragraph (a) of this subsection may apply to fewer than five (5) consecutive policy years. Provided, that no basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in KRS 304.15-340 or 304.15-342, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value. (4) All adjusted premiums and present values referred to in this section shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy's compliance with the other sections of KRS 304.15-310 to 304.15-360. The cash surrender values referred to in this section shall include any endowment benefits provided for by the policy. (5) Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment, shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in KRS 304.15-310, 304.15-320, 304.15-330, 304.15-342 and 304.15-350. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed as paragraphs (a) to (f) of KRS 304.15-350 shall conform with the principles of this section. Effective: July 15, 1982 History: Created 1982 Ky. Acts ch. 263, sec. 7, effective July 15, 1982.

KRS 304.15-360 Exceptions

304.15-360. Exceptions KRS 304.15-310 to 304.15-352, inclusive, shall not apply to any of the following: (1) Reinsurance; (2) Group insurance; (3) Pure endowment; (4) Annuity or reversionary annuity contract, except as provided in KRS 304.15-315; (5) Term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of twenty (20) years or less expiring before age seventy-one (71) for which uniform premiums are payable during the entire term of the policy; (6) Term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in KRS 304.15-350 and 304.15-352, is less than the adjusted premium so calculated, on a term policy of uniform amount, or renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance, and for a term of twenty (20) years or less expiring before age seventy-one (71), for which uniform premiums are payable during the entire term of the policy; (7) Policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in KRS 304.15- 320, 304.15-330, 304.15-340 and 304.15-342, exceeds two and one-half percent (2.5%) of the amount of insurance at the beginning of the same policy year; nor to any (8) Policy which shall be delivered outside this state through an agent or other representative of the insurer issuing the policy. For purposes of determining the applicability of this section, the age at expiry for a joint term life insurance policy shall be at the age at expiry of the oldest life. Effective: June 13, 1984 History: Amended 1984 Ky. Acts ch. 111, sec. 131, effective July 13, 1984. -- Amended 1982 Ky. Acts ch. 263, sec. 8, effective July 15, 1982. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 36, effective June 18, 1970.

KRS 304.15-365 Standard Nonforfeiture Law for Individual Deferred Annuities of 2005

304.15-365. Standard Nonforfeiture Law for Individual Deferred Annuities of 2005 (1) This section shall be known as the "Standard Nonforfeiture Law for Individual Deferred Annuities of 2005." (2) (a) This section shall not apply to any reinsurance group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this state through an agent or other representative of the insurer issuing the contract. (b) However, to the extent that a variable annuity contract provides benefits that do not, before the maturity date, vary in accordance with the investment performance of any separate account or accounts maintained by the insurer as to such contract, as provided for in KRS 304.15-390, the contract shall contain provisions that satisfy the requirements of this section and shall not otherwise be subject to this section. (3) (a) In the case of contracts issued on or after July 1, 2006, no contract of annuity, except as provided in subsection (2) of this section, shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract: 1. That upon cessation of payment of considerations under a contract, or upon the written request of the contract owner, the insurer shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in subsections (8), (9), (10), (11), and (13) of this section; 2. If a contract provides for a lump sum settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the insurer shall pay, in lieu of any paid-up annuity benefit, a cash surrender benefit of such amount as is specified in subsections (8), (9), (10), (11), and (13) of this section. The insurer may reserve the right to defer the payment of this cash surrender benefit for a period not to exceed six (6) months after demand therefor with surrender of the contract after making written request and receiving written approval of the commissioner. The request shall address the necessity and equitability to all policyholders of the deferral; 3. A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of such benefits; and 4. A statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which these benefits are altered by the existence of any additional amounts credited by the insurer to the contract, any indebtedness to the insurer on the contract, or any prior withdrawals from or partial surrenders of the contract. (b) Notwithstanding the requirements of this subsection, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of two (2) full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to that period would be less than twenty dollars ($20) monthly, the insurer may at its option terminate the contract by payment in cash of the then-present value of such portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by this payment shall be relieved of any further obligation under such contract. (4) (a) The minimum values as specified in subsections (8), (9), (10), (11), and (13) of this section of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section. (b) The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to that time at rates of interest as indicated in subsection (5) of this section of the net considerations, as defined in paragraph (c) of this subsection, paid prior to that time, decreased by the sum of: 1. Any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest as indicated in subsection (5) of this section; 2. An annual contract charge of fifty dollars ($50) accumulated at rates of interest as indicated in subsection (5) of this section; and 3. The amount of any indebtedness to the insurer on the contract, including interest due and accrued. (c) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to eighty-seven and one-half percent (87.5%) of gross considerations credited to the contract during that contract year. (5) The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of three percent (3%) per annum and the following, which shall be specified in the contract if the interest rate will be reset: (a) The five (5) year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date or average over a period rounded to the nearest one- twentieth of one percent (0.05%), specified in the contract no longer than fifteen (15) months prior to the contract issue date or redetermination date under paragraph (d) of this subsection; (b) Reduced by one hundred twenty-five (125) basis points; (c) Where the resulting interest rate is not less than one percent (1%); and (d) The interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date basis and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the five (5) year Constant Maturity Treasury Rate to be used at each redetermination date. (6) (a) During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subsection (5)(b) of this section up to an additional one hundred (100) basis points to reflect the value of the equity index benefit. (b) The present value at the contract issue date and at each redetermination date thereafter of the additional reduction shall not exceed the market value of the benefit. (c) The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. (d) Lacking such demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction. (7) The commissioner may promulgate administrative regulations in accordance with KRS Chapter 13A that: (a) Implement the provisions of subsection (6) of this section; and (b) Provide for further adjustments to the calculation of minimum nonforfeiture amounts for: 1. Contracts that provide substantive participation in an equity index benefit; and 2. Other contracts for which the commissioner determines adjustments are justified. (8) (a) Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. (b) This present value shall be computed using the mortality table, if any, and the interest rates specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract. (9) (a) For contracts which provide cash surrender benefits, the cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit which would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, the present value being calculated on the basis of an interest rate not more than one percent (1%) higher than the interest rate specified in the contract for accumulating the net considerations to determine the maturity value, decreased by the amount of any indebtedness to the insurer on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the insurer to the contract. (b) In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. (c) The death benefit under the contracts shall be at least equal to the cash surrender benefit. (10) (a) For contracts which do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, the present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine the maturity value, and increased by any existing additional amounts credited by the insurer to the contract. (b) For contracts which do not provide any death benefits prior to the commencement of any annuity payments, the present values shall be calculated on the basis of the interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. (c) However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time. (11) For the purpose of determining the benefits calculated under subsections (9) and (10) of this section, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later. (12) Any contract which does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not provided. (13) Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs. (14) (a) For any contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. (b) Notwithstanding the provisions of subsections (8), (9), (10), (11), and (13) of this section, additional benefits payable: 1. In the event of total and permanent disability; 2. As reversionary annuity or deferred reversionary annuity benefits; or 3. As other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits; shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid- up annuity, cash surrender and death benefits that may be required by this section. The inclusion of these additional benefits shall not be required in any paid-up benefits, unless these additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender and death benefits. (15) Any optional maturity date offered for an annuity contract issued pursuant to this section shall: (a) Not impose a surrender charge that is longer than ten (10) years beyond the optional maturity date agreed to by the annuitant and the insurer; and (b) Be offered to an annuitant before the annuitant attains seventy (70) years of age. (16) (a) After August 1, 2005, any insurer may file with the commissioner a written notice of its election to apply the provisions of this section on a contract-form by contract-form basis to annuity contracts issued by the insurer during the period from the date of the election through June 30, 2006. (b) Insurers shall apply the provisions of this section to annuity contracts issued on or after July 1, 2006. Effective: July 15, 2026 History: Amended 2026 Ky. Acts ch. 45, sec. 24, effective July 15, 2026. -- Amended 2010 Ky. Acts ch. 24, sec. 1187, effective July 15, 2010. -- Created 2005 Ky. Acts ch. 47, sec. 3, effective June 20, 2005.

KRS 304.15-370 Disposition of miscellaneous proceeds

304.15-370. Disposition of miscellaneous proceeds Upon the death of the insured and except as is otherwise expressly provided by the policy, a life insurer may pay to the surviving spouse, children, beneficiary, or other person other than the insured's estate, appearing to the insurer to be equitably entitled thereto, sums then held by it and comprising: (1) Premiums paid in advance but not due prior to such death, or funds held on deposit for the payment of future premiums. (2) Dividends theretofore declared on the policy and held by the insurer under the insured's option. (3) Dividends becoming payable on or after the death of the insured. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 37, effective June 18, 1970.

KRS 304.15-380 Participating, nonparticipating policies -- Right to issue

304.15-380. Participating, nonparticipating policies -- Right to issue A life insurer may issue policies on either the participating basis or the nonparticipating basis, or on both bases, if the right or absence of right of participation is reasonably related to the premium charged and the insurer is otherwise not in violation of KRS 304.12-080 or 304.12-090. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 38, effective June 18, 1970.

KRS 304.15-390 Pension, retirement, profit-sharing, life insurance, or annuity agreements -- Separate accounts

304.15-390. Pension, retirement, profit-sharing, life insurance, or annuity agreements -- Separate accounts (1) A domestic life insurer may establish one (1) or more separate accounts, and may allocate thereto, in accordance with the terms of a written contract or agreement, any amounts paid to the insurer in connection with a pension, retirement or profit- sharing plan, life insurance, or an annuity which are to be applied to provide benefits payable in fixed or in variable dollar amounts or in both. (2) The income, if any, and gains and losses, realized or unrealized, on each such account shall be credited to or charged against the amounts allocated to the account in accordance with the agreement, without regard to other income, gains or losses of the insurer. (3) Assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then in accordance with the terms of the applicable contract or agreement; except, that the portion of the assets of such separate account at least equal to the insurer's reserve liability with regard to the guaranteed benefits and funds referred to in subsection (1) of this section, if any, shall be valued in accordance with rules otherwise applicable to the insurer's assets. (4) If the agreement provides for payment of benefits in variable amounts, the contract shall contain a statement of the essential features of the procedure to be followed by the insurer in determining the dollar amount of such variable benefits. Any such contract and any certificate issued thereunder shall state that such dollar amount may decrease or increase and shall contain on its first page a statement that the benefits thereunder are on a variable basis. (5) No domestic life insurer, and no other authorized life insurer, shall be authorized to deliver within this state any such contract or agreement providing benefits in variable amounts until the insurer has satisfied the commissioner that its condition or methods of operation in connection with the issuance of such contracts or agreements will not render its operation hazardous to the public or its policyholders in this state. In determining the qualification of an insurer requesting such authority, the commissioner shall consider, among other things: (a) The history and financial condition of the insurer; (b) The character, responsibility and general fitness of the officers and directors of the insurer; and (c) In the case of an insurer other than a domestic insurer, whether the statutes or regulations of the jurisdiction of its incorporation provide a degree of protection to policyholders and the public which is substantially equal to that provided by this section and the rules and regulations issued thereunder. (6) Amounts allocated by domestic life insurers to separate accounts in the exercise of the power granted by this section shall be owned by the insurer and the insurer shall not be, or hold itself to be, a trustee, in respect to such amounts. (7) The commissioner shall have sole authority to regulate the issuance and sale of such agreements, and to make rules and regulations for the effectuation of this section. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1188, effective July 15, 2010. -- Amended 1986 Ky. Acts ch. 437, sec. 20, effective July 15, 1986. -- Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 39, effective June 18, 1970.

KRS 304.15-400 Prohibited policy plans

304.15-400. Prohibited policy plans (1) No life insurer shall hereafter deliver or issue for delivery in this state: (a) As part of or in combination with any life insurance, endowment or annuity contract, any agreement or plan, additional to the rights, dividends, and benefits arising out of any such contract, which provides for the accumulation of profits over a period of years and for payment of all or any part of such accumulated profits only to members or policyholders of a designated group or class who continue as members or policyholders until the end of a specified or ascertainable period of years. (b) Any "registered" policy; that is, any policy purporting to be "registered" or otherwise specially recorded, with any agency of the state of Kentucky or of any other state, or with any bank, trust company, escrow company, or other institution other than the insurer; or purporting that any reserves, assets or deposits are held, or will be so held, for the special benefit or protection of the holder of such policy, by or through any such agency or institution. (c) Any policy or contract under which any part of the premium or of funds or values arising from the policy or contract or from investment of reserves, or from mortality savings, lapses or surrenders, in excess of the normal reserves or amounts required to pay death, endowment, and nonforfeiture benefits in respective amounts as specified in or pursuant to the policy or contract, are on a basis not involving insurance or life contingency features: 1. To be placed in special funds or segregated accounts or special designated places or 2. To be invested in specially designated investments or types thereof, and the funds or earnings thereon to be divided among the holders of such policies or contracts, or their beneficiaries or assignees. This provision does not apply as to any contract authorized under KRS 304.15-390. (d) Any policy providing benefits or values for surviving or continuing policyholders contingent upon the lapse or termination of the policies of other policyholders, whether by death or otherwise. (e) Any policy containing or referring to one or more of the following provisions or statements: 1. Investment returns or profit sharing, other than as a participation in the divisible surplus of the insurer under a regular participation provision as provided for in KRS 304.15-100. 2. Special treatment in the determination of any dividend that may be paid as to such policy. 3. Reference to premiums as "deposits." 4. Relating policyholder interest or returns to those of stockholders. 5. That the policyholder as a member of a select group will be entitled to extra benefits or extra dividends not available to policyholders generally. (2) This section shall not be deemed to prohibit the provision, payment, allowance or apportionment of regular annual dividends or "savings" under regular participating forms of policies or contracts. Effective: June 18, 1970 History: Created 1970 Ky. Acts ch. 301, subtit. 15, sec. 40, effective June 18, 1970.

KRS 304.15-410 Minimum reserves

304.15-410. Minimum reserves In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in KRS 304.6-150, 304.6-155 and 304.6-180, the reserves which are held under any such plan must: (1) Be appropriate in relation to the benefits and the pattern of premiums for that plan; and (2) Be computed by a method which is consistent with the principles of this standard valuation law; as determined by regulations promulgated by the commissioner. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1189, effective July 15, 2010. -- Created 1982 Ky. Acts ch. 263, sec. 14, effective July 15, 1982.

KRS 304.15-420 Unclaimed Life Insurance Benefits Act

304.15-420. Unclaimed Life Insurance Benefits Act (1) The General Assembly declares the purpose of this section shall be to require recognition of the escheat statute, as found in KRS 393A.130, and to require complete and proper disclosure, transparency, and accountability relating to any method of payment for annuity, retained asset, or life insurance death benefits regulated by the Department of Insurance. (2) As used in this section: (a) "Contract" means an annuity contract. The term "contract" shall not include an annuity used to fund an employment-based retirement plan or program where the insurer is not committed by terms of the annuity contract to pay death benefits to the beneficiaries of specific plan participants; (b) "Death Master File" means the United States Social Security Administration's Death Master File or any other database or service that is at least as comprehensive as the United States Social Security Administration's Death Master File for determining that a person has reportedly died; (c) "Death Master File match" means a search of the Death Master File that results in a match of the Social Security number or the name and date of birth of an insured, annuitant, or retained asset account holder; and (d) "Policy" means any policy or certificate of life insurance that provides a death benefit. The term "policy" shall not include: 1. Any policy or certificate of life insurance that provides a death benefit under: a. An employee benefit plan, subject to the Employee Retirement Income Security Act of 1974, as defined by 29 U.S.C. sec. 1002(3); b. A governmental plan as defined by 29 U.S.C. sec. 1002(32); c. A church plan as defined by 29 U.S.C. sec. 1002(33); or d. Any federal employee benefit program; 2. Any policy or certificate of life insurance that is used to fund a preneed funeral contract or prearrangement as defined in KRS 304.12-240(1)(a); or 3. Any policies or certificates of insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction, or any group policy issued to a creditor to insure the lives of the creditor's debtors and any certificates issued under such policies. All other terms used in this section shall be interpreted in a manner consistent with the definitions used in KRS Chapter 304. (3) (a) An insurer shall perform a comparison of its insureds' in-force life insurance policies, contracts, and retained asset accounts against a Death Master File, on at least a semiannual basis, to identify potential matches of its insureds. An insurer may comply with the requirements of this section by using the entire Death Master File once, and for all comparisons thereafter, an insurer may utilize the Death Master File updates. (b) For those potential matches identified as a result of a Death Master File match, the insurer shall within ninety (90) days of a Death Master File match: 1. Complete a good-faith effort, which shall be documented by the insurer, to confirm the death of the insured, annuitant, or retained asset account holder against other available records and information; and 2. Determine whether benefits are due in accordance with the applicable policy or contract and, if benefits are due in accordance with the applicable policy or contract: a. Use good-faith efforts, which shall be documented by the insurer, to locate the beneficiary or beneficiaries; and b. Provide the appropriate claims forms or instructions to each beneficiary to make a claim, including the need to provide an official death certificate if applicable under the policy, contract, or retained asset account. (c) With respect to group life insurance, insurers are required only to confirm the possible death of an insured when the insurers provide full recordkeeping services to the group policy holder. (d) To the extent permitted by law, the insurer may disclose minimum necessary personal information about the insured or beneficiary to a person who the insurer reasonably believes may be able to assist the insurer locate the beneficiary or a person otherwise entitled to payment of the claims proceeds. (4) An insurer shall not charge insureds, account holders, or beneficiaries for any fees or costs associated with a search or verification conducted pursuant to this section. (5) The benefits from a life insurance policy, contract, or a retained asset account, plus any applicable accrued interest, shall first be payable to the designated beneficiaries or owners and, in the event those beneficiaries or owners cannot be found, shall escheat to the state as unclaimed property pursuant to KRS 393A.130. (6) An insurer shall notify the State Treasurer upon the expiration of the statutory time period for escheat that: (a) A life insurance policy or contract beneficiary or retained asset account holder has not submitted a claim with the insurer; and (b) The insurer has complied with subsection (3) of this section and has been unable, after good-faith efforts documented by the insurer, to contact the retained asset account holder or any beneficiary. (7) Upon such notice, an insurer shall submit, on its next unclaimed property report due to the State Treasurer, the unclaimed life insurance benefits or unclaimed retained asset accounts, plus any applicable accrued interest, to the State Treasurer. (8) Failure to meet any requirement of this section with such frequency as to constitute a general business practice shall constitute a violation of Subtitle 12 of KRS Chapter 304. (9) Nothing in this section shall be construed to create or imply a private cause of action for a violation of this section. An insurer that is making a good-faith effort to comply with this section shall not be subject to any fees, fines, penalties, or interest for failure to perform a comparison of its in-force life insurance policies, contracts, and retained asset accounts prior to July 15, 2014. (10) The commissioner shall have exclusive authority and jurisdiction in his or her reasonable discretion based upon a demonstration of hardship to the insurer to issue an order allowing an insurer to phase in compliance with this section for a time period not to exceed one (1) year, according to a plan and timeline approved by the commissioner. (11) This section shall be known as the Unclaimed Life Insurance Benefits Act. Effective: July 14, 2018 History: Amended 2018 Ky. Acts ch. 163, sec. 90, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 60, sec. 3, effective July 15, 2014. -- Created 2012 Ky. Acts ch. 58, sec. 1, effective January 1, 2013. Legislative Research Commission Note (1/1/2013). The internal numbering of subsection (3)(b) of this statute has been modified by the Reviser of Statutes from the way it appeared in 2012 Ky. Acts ch. 58, sec. 1, under the authority of KRS 7.136(1). The words in the text were not changed.

KRS 304.15-700 Licensing requirements governing life settlement providers and brokers -- Contracts -- Commissioner's approval required -- Forms

304.15-700. Licensing requirements governing life settlement providers and brokers -- Contracts -- Commissioner's approval required -- Forms (1) No person may act as a life settlement provider without first having obtained a license as a life settlement provider from the commissioner. (2) Except as provided in paragraph (b) or (c) of this subsection, no person may broker, solicit, or negotiate life settlement contracts between an owner and one (1) or more life settlement providers or otherwise act on behalf of an owner without first having obtained a license as a life settlement broker from the commissioner as follows: (a) All applicants for a life settlement broker license shall attend the required life broker training and pass a life broker examination designated by the commissioner through administrative regulation; (b) A person licensed as a resident or nonresident insurance agent with a life line of authority, as set forth in KRS 304.9-030(2)(a), shall be deemed to meet the licensing requirements of a life settlement broker and shall be permitted to operate as a life settlement broker without obtaining a license as a life settlement broker as set forth in this subtitle if: 1. That person has been licensed as a resident insurance agent with a life line of authority in his home state for at least one (1) year; 2. Not later than thirty (30) days from the first day of operating as a life settlement broker, the agent notifies the commissioner, on a notification form prescribed by the commissioner, that he is acting as a life settlement broker and pays any applicable fees to be determined by the commissioner. The notification shall include an acknowledgment by the agent that he will operate as a life settlement broker in accordance with this subtitle; and 3. Irrespective of the manner in which a life settlement broker or life insurance agent is compensated, the life settlement broker or life insurance agent is deemed to represent only the owner and owes a fiduciary duty to the owner to act according to the owner's instructions and in the best interests of the owner; (c) Notwithstanding this subsection, a person licensed as an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the owner, whose compensation is not paid directly or indirectly by the life settlement provider, may negotiate life settlement contracts without having to obtain a license as a life settlement broker; and (d) A life insurance agent operating as a life settlement broker in accordance with paragraph (b) of this subsection, prior to the execution of the life settlement contract by all the parties for which such agent is operating as a life settlement broker, shall have in force evidence of financial responsibility as follows: 1. A policy of insurance covering the legal liability of the agent as the result of erroneous acts or failure to act in his or her capacity as a life settlement broker, and inuring to the benefit of any aggrieved party as the result of any single occurrence in the sum of not less than twenty thousand dollars ($20,000) and one hundred thousand dollars ($100,000) in the aggregate for all occurrences within one (1) year; or 2. An agreement with a licensed life settlement provider whereby the agent is an additional insured on the policy of insurance covering the legal liability of both the life settlement provider and the agent as the result of erroneous acts or failure to act in his or her capacity as a life settlement broker on a life settlement contract to which the life settlement provider is a party, in the sum of twenty thousand dollars ($20,000) for any single occurrence; or 3. A cash surety bond, executed by an insurer authorized to write business in this Commonwealth, in the sum of twenty thousand dollars ($20,000), which shall be subject to lawful levy of execution by any party to whom the agent has been found to be legally liable as the result of erroneous acts or failure to act in his or her capacity as a life settlement broker. (3) Application for a life settlement provider license or a life settlement broker license shall be made in accordance with KRS 304.9-150. (4) Licenses for life settlement providers and life settlement brokers shall be in accordance with Subtitle 9 of KRS Chapter 304. A business entity licensed as a life settlement broker or life settlement provider shall designate individuals to act under its license in accordance with KRS 304.9-133. (5) Prior to issuance of a license as a life settlement broker or life settlement provider, except as provided in subsection (2)(d) of this section, the applicant shall obtain, and thereafter for as long as the license remains in effect shall keep in force, evidence of financial responsibility in the sum of not less than twenty thousand dollars ($20,000) per occurrence, and the sum of one hundred thousand dollars ($100,000) in the aggregate, for all occurrences within one (1) year. This evidence shall be in the form of an errors and omissions insurance policy issued by an authorized insurer, a bond issued by an authorized corporate surety, a deposit, or any combination of these evidences of financial responsibility. The policy, bond, deposit, or combination thereof shall not be terminated without thirty (30) days' prior written notice to the licensee. This subsection shall not apply to a life insurance agent operating as a life settlement broker in accordance with subsection (2) of this section. (6) No person shall use a life settlement contract form or provide to an owner a disclosure statement form in this Commonwealth unless it has been filed with and approved by the commissioner in the following manner: (a) At the expiration of sixty (60) days from the date the filing is complete, the form filed shall be deemed approved unless the commissioner has by order given prior approval or disapproval. Approval of a form by the commissioner shall constitute a waiver of any unexpired portion of the waiting period. The commissioner may extend by not more than thirty (30) days the time period in which he or she may approve or disapprove the form. The commissioner shall give notice to the licensee of the extension before expiration of the initial sixty (60) day period. At the expiration of the extended period, and in the absence of the prior approval or disapproval, the form shall be deemed approved. The commissioner may at any time, after notice and for cause shown, withdraw any approval. The commissioner shall disapprove a life settlement contract form or disclosure statement form if, in the determination of the commissioner, the contract or provisions contained therein are unreasonable, contrary to the interests of the public, or otherwise are misleading or unfair to the owner. Upon notice and hearing the commissioner shall withdraw approval of any contract later determined to be unreasonable, misleading, unfair, or contrary to the interest of the public; and (b) Forms may be submitted simultaneously with an application or at any time during the process of approving an application for a license pursuant to this subtitle or at any other time. (7) A licensed life settlement provider shall not use any person to perform the functions of a life settlement broker as defined in KRS 304.15-020 unless the person holds a current and valid license or is a licensed insurance agent authorized pursuant to this subtitle to operate as a life settlement broker. A licensed life settlement broker shall not use any person to perform the functions of a life settlement provider as defined in KRS 304.15-020 unless the person holds a current and valid license as a life settlement provider. (8) If any employee of a licensee violates any provision of KRS 304.15-020, 304.15- 700 to 304.15-720, 304.42-190, and 304.99-126, the department may take disciplinary action against the employer licensee. (9) When a life settlement provider elects to use a related provider trust, the life settlement provider shall file notice of its intention to use that trust with the department with a copy of the trust agreement. Any change in the trust agreement shall be filed with the commissioner prior to its effect. (10) Any additional death benefit payment on a life insurance policy that is the subject of a life settlement contract with a double or additional indemnity for accidental death shall be payable to the following: (a) The beneficiary last named by the policy owner prior to entering into the life settlement contract; or (b) To the estate of the owner in the absence of a beneficiary. (11) An insurer that issued a policy that is the subject of a life settlement contract shall not be responsible for any act or omission of a broker, provider, or purchaser arising out of or in connection with the life settlement transaction, unless the insurer receives compensation for the placement of the life settlement contract from the provider, purchaser, or broker in connection with the life settlement contract. (12) No insurer may, as a condition of responding to a request for verification of coverage or in connection with the transfer of a policy pursuant to a life settlement contract, require that the owner, insured, provider, or broker sign any form, disclosure, consent, waiver, or acknowledgment that has not been expressly approved by the commissioner for use in connection with life settlement contracts in the Commonwealth. Effective: July 12, 2012 History: Amended 2012 Ky. Acts ch. 74, sec. 11, effective July 12, 2012. -- Amended 2010 Ky. Acts ch. 24, sec. 1190, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 32, sec. 2, effective July 15, 2008. -- Amended 2006 Ky. Acts ch. 54, sec. 1, effective July 12, 2006. -- Amended 2005 Ky. Acts ch. 58, sec. 7, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 472, sec. 2, effective July 14, 2000. -- Created 1998 Ky. Acts ch. 403, sec. 2, effective July 15, 1998.

KRS 304.15-702 Permitted questioning of life insurance applicant concerning financing of premium payments

304.15-702. Permitted questioning of life insurance applicant concerning financing of premium payments (1) In addition to other questions an insurer may lawfully pose to a life insurance applicant, insurers may inquire in the application for insurance whether the proposed owner intends to pay premiums with the assistance of financing from a lender that will use the policy as collateral to support the financing. (a) If, as described in KRS 304.15-020(17), the loan provides funds which can be used for a purpose other than paying for the premiums, costs, and expenses associated with obtaining and maintaining the life insurance policy and loan, the application shall be rejected as a violation of the prohibited practices in KRS 304.15-717. (b) If the financing does not violate KRS 304.15-717 in this manner, the insurer: 1. May make disclosures to the applicant and the insured, either on the application or an amendment to the application to be completed no later than the delivery of the policy, which shall include but not be limited to the following statement or a substantially similar statement: "If you have entered into a loan arrangement where the policy is used as collateral, and the policy does change ownership at some point in the future in satisfaction of the loan, the following may be true: a. A change of ownership could lead to a stranger owning an interest in the insured's life; b. A change of ownership could in the future limit your ability to purchase future insurance on the insured's life because there is a limit to how much coverage insurers will issue on one (1) life; c. Should there be a change of ownership and you wish to obtain more insurance coverage on the insured's life in the future, the insured's higher issue age, a change in health status, or other factors may reduce the ability to obtain coverage and may result in significantly higher premiums; and d. You should consult a professional advisor, since a change in ownership in satisfaction of the loan may result in tax consequences to the owner, depending on the structure of the loan."; and 2. May require certifications from the applicant or the insured or both which shall include but not be limited to the following statement or a substantially similar statement: "I certify that: a. I have not entered into any agreement or arrangement providing for the future sale of this life insurance policy; b. My loan arrangement for this policy provides funds sufficient to pay for some or all of the premiums, costs, and expenses associated with obtaining and maintaining my life insurance policy, but I have not entered into any agreement by which I am to receive consideration in exchange for procuring this policy; and c. The borrower has an insurable interest in the insured." Effective: July 15, 2008 History: Created 2008 Ky. Acts ch. 32, sec. 5, effective July 15, 2008.

KRS 304.15-705 Commissioner's authority to examine -- Retention and inspection of records

304.15-705. Commissioner's authority to examine -- Retention and inspection of records (1) The commissioner may, when the commissioner deems it reasonably necessary to protect the interests of the public, examine the business and affairs of any licensee or applicant for a license. The commissioner shall have the authority to order information reasonably necessary to ascertain whether the licensee or applicant is acting or has acted in violation of the law or otherwise contrary to the interest of the public. The reasonable expenses incurred in conducting any examination shall be paid by the licensee or applicant. (2) Records of all transactions of life settlement contracts shall be subject to the following: (a) The following records of all transactions of life settlement contracts shall be maintained by the licensee for five (5) years after the death of the owner, and shall be available to the commissioner for inspection during reasonable business hours: 1. Proposed, offered, or executed settlement contracts, underwriting documents, policy forms, and applications from the date of the proposal, offer, or execution of the settlement contract, whichever is later; and 2. All checks, drafts, or other evidence and documentation related to the payment, transfer, deposit, or release of funds from the date of the transaction. (b) All other business records shall be kept for a period of five (5) years following creation of records, or the completion of the purpose for which records were created, whichever shall occur last. (c) This section shall not relieve a licensed settlement provider of the obligation to produce these documents to the commissioner after the retention period has expired if the settlement provider has retained the documents. (d) Records required to be retained by this section shall be legible and complete and may be retained in paper, photograph, microprocess, magnetic, mechanical, or electronic media, or by any process that accurately reproduces or forms a durable medium for the reproduction of the record. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1191, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 32, sec. 21, effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 8, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 472, sec. 3, effective July 14, 2000. -- Created 1998 Ky. Acts ch. 403, sec. 3, effective July 15, 1998. Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 32 intended to change all existing references in the KRS from "viator" to "owner." One reference to "viator" in this section was overlooked during the bill drafting process. The Reviser of Statutes has made this change upon the authority of KRS 7.136(1)(h).

KRS 304.15-708 Emergency cease and desist order when public health, safety, or welfare is endangered -- Fee

304.15-708. Emergency cease and desist order when public health, safety, or welfare is endangered -- Fee (1) When the department finds that a violation presents an immediate danger to the public health, safety, or welfare that requires an immediate final order, it shall issue an emergency cease and desist order reciting with particularity the facts underlying the findings. The emergency cease and desist order is effective immediately upon service of a copy of the order on the respondent. (2) The department may impose and collect an administrative fine not to exceed ten thousand dollars ($10,000) for each violation of a cease and desist order issued in accordance with this section. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1192, effective July 15, 2010. -- Created 2000 Ky. Acts ch. 472, sec. 5, effective July 14, 2000.

KRS 304.15-709 Remedies of department and of persons damaged by life settlement violations

304.15-709. Remedies of department and of persons damaged by life settlement violations (1) In addition to the penalties and other enforcement provisions of KRS 304.15-020, 304.15-700 to 304.15-720, 304.42-190, and 304.99-126, if any person violates any provision of KRS 304.15-020, 304.15-700 to 304.15-720, 304.42-190, and 304.99- 126, or any administrative regulations promulgated under KRS 304.15-020, 304.15- 700 to 304.15-720, 304.42-190, and 304.99-126, the department may seek an injunction in Franklin Circuit Court or in the Circuit Court of the county where the person resides or has a principal place of business and may apply for temporary and permanent orders that the department determines necessary to restrain the person from committing the violation. (2) Any person damaged by the acts of a person in violation of any provision of KRS 304.15-020, 304.15-700 to 304.15-720, 304.42-190, and 304.99-126 may bring a civil action against the person in the Circuit Court of the county in which the alleged violator resides, or has a principal place of business, or in the county where the alleged violation occurred. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1193, effective July 15, 2010. -- Created 2000 Ky. Acts ch. 472, sec. 8, effective July 14, 2000.

KRS 304.15-710 Life settlement provider's duties of disclosure to owner

304.15-710. Life settlement provider's duties of disclosure to owner (1) With each application for a life settlement contract, a life settlement provider or life settlement broker shall provide the owner a copy of the department's consumer guide relating to life settlements. The provider shall provide in writing, in a separate document that is signed by the owner and provider the information in this subsection to the owner no later than the date the life settlement contract is signed by all parties. The written disclosures shall be conspicuously displayed in any life settlement contract or in a separate document furnished to the owner by a provider including any affiliations or contractual arrangements between the provider and the broker and shall provide the following information: (a) That there are possible alternatives to life settlement contracts including but not limited to accelerated benefits or policy loans offered under the owner's policy; (b) That some or all of the proceeds of the life settlement may be taxable under federal income tax laws and state franchise and income tax laws, and that assistance should be sought from a personal tax advisor; (c) That proceeds of the life settlement contract could be subject to the claims of creditors; (d) That receipt of the proceeds of a life settlement contract may adversely affect the owner's eligibility for Medicaid or other government benefits or entitlements, and that advice should be obtained from the appropriate government agencies; (e) That the owner has a right to rescind a life settlement contract before the earlier of thirty (30) calendar days of the date it is executed by all parties or fifteen (15) calendar days after the receipt of the proceeds of the life settlement contract by the owner. If exercised by the owner, rescission is effective only if both notice of the rescission is given, and within the rescission period all proceeds, and any premiums, loans, and loan interest are repaid to the settlement provider. If the insured dies during the rescission period, the settlement contract shall be deemed to have been rescinded, subject to repayment of all life settlement proceeds and any premiums, loans, and loan interest to the life settlement provider. The life settlement provider shall effectuate the change of ownership of the policy or certificate to the owner immediately upon effective rescission by the owner; (f) That entering into a life settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy, to be forfeited by the owner and that assistance should be sought from a financial adviser; (g) That funds will be sent to the owner within three (3) business days after the life settlement provider has received the insurer's or group administrator's acknowledgment that ownership of the policy has been transferred and the beneficiary has been designated pursuant to the life settlement contract; (h) That the disclosure document shall contain the following language: "All medical, financial, or personal information solicited or obtained by a life settlement provider or life settlement broker about an insured, including the insured's identity or the identity of family members, a spouse, or a significant other may be disclosed as necessary to effect the life settlement between the owner and the life settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every two (2) years."; and (i) That the insured may be contacted by the life settlement provider or its authorized representative for the purpose of determining the insured's health status or to verify the insured's address. This contact shall be limited to once every three (3) months if the insured has a life expectancy of more than one (1) year, and no more than once per month if the insured has a life expectancy of one (1) year or less. (2) A life settlement provider shall provide the owner with at least the following disclosures no later than the date the life settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the life settlement contract or in a separate document signed by the owner and the life settlement provider and provide the following information: (a) State the affiliation, if any, between the life settlement provider and the issuer of the policy to be acquired pursuant to a settlement contract; (b) State the name, address and telephone number of the life settlement provider; (c) If a policy to be acquired pursuant to a life settlement contract has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be acquired pursuant to a settlement contract, the owner shall be informed of the possible loss of coverage on the other lives and shall be advised to consult with his insurance producer or the company issuing the policy for advice on the proposed life settlement contract; (d) State the dollar amount of the current death benefit payable to the life settlement provider under the policy. The life settlement provider shall, if known, also disclose the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy, and the life settlement provider's interest in those benefits; (e) State the name, business address, and telephone number of the independent third party escrow agent, and the fact that the owner may inspect or receive copies of the relevant escrow or trust agreements or documents; (f) The date by which the funds will be available to the owner and the transmitter of the funds; (g) That a consumer guide shall be delivered to owners with each application as required in this subsection; (h) That applications and life settlement contracts shall contain the statement as required in KRS 304.15-717(2); (i) That a broker represents exclusively the owner, and not the insurer or the provider or any other person, and owes a fiduciary duty to the owner, including a duty to act according to the owner's instructions and in the best interests of the owner; and (j) The fact that a change in ownership could in the future limit the insured's ability to purchase future insurance on the insured's life because there is a limit to how much coverage insurers will issue on one (1) life. (3) If the life settlement provider transfers ownership or changes the beneficiary of the policy, the life settlement provider shall communicate the change in ownership or beneficiary to the insured within twenty (20) days after the change. (4) A broker shall provide the owner and the provider with at least the following disclosures no later than the date the life settlement contract is signed by all parties. The disclosures shall be conspicuously displayed in the life settlement contract or in a separate document signed by the owner and provide the following information: (a) The name, business address, and telephone number of the broker; (b) A full, complete, and accurate description of all the offers, counter-offers, acceptances, and rejections relating to the proposed life settlement contract; (c) The name of each broker who receives compensation and the amount of compensation received by the broker, which compensation includes anything of value paid or given to the broker in connection with the life settlement contract; (d) A complete reconciliation of the gross offer or bid by the provider to the net amount of proceeds or value to be received by the owner. For the purposes of this paragraph, "gross offer or bid" means the total amount or value offered by the provider for the purchase of one (1) or more life insurance policies, inclusive of the commissions and fees; and (e) The failure to provide the disclosures or rights described in this section shall be deemed an unfair trade practice. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1194, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 32, sec. 4, effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 9, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 472, sec. 9, effective July 14, 2000. -- Created 1998 Ky. Acts ch. 403, sec. 4, effective July 15, 1998. Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 32 intended to change all existing references in the KRS from "viator" to "owner." One reference to "viator" in this section was overlooked during the bill drafting process. The Reviser of Statutes has made this change upon the authority of KRS 7.136(1)(h).

KRS 304.15-712 Permitted and prohibited life insurance advertising and marketing

304.15-712. Permitted and prohibited life insurance advertising and marketing (1) A broker or provider licensed pursuant to KRS 304.15-700 to 304.15-720 may conduct or participate in advertisements within this state. Such advertisements shall comply with all advertising and marketing laws of this chapter or rules and administrative regulations promulgated by the commissioner that are applicable to life insurers or to brokers, and providers licensed pursuant to this chapter. (2) Advertisements shall be accurate, truthful, and not misleading in fact or by implication. (3) No person or trust shall: (a) Directly or indirectly market, advertise, solicit, or otherwise promote the purchase of a life insurance policy for the sole purpose of, or with a primary emphasis on, settling the policy; or (b) Except as provided in KRS 304.12-092, use the words "free," "no cost," or words of similar import in the marketing, advertising, soliciting, or otherwise promoting the purchase of a life insurance policy. Effective: July 14, 2022 History: Amended 2022 Ky. Acts ch. 64, sec. 4, effective July 14, 2022. -- Amended 2010 Ky. Acts ch. 24, sec. 1195, effective July 15, 2010. -- Created 2008 Ky. Acts ch. 32, sec. 3, effective July 15, 2008.

KRS 304.15-715 Requirements for life settlement contracts

304.15-715. Requirements for life settlement contracts (1) A life settlement provider entering into a life settlement contract with any person shall first obtain: (a) If the owner is insured, a written statement from a licensed attending physician that the owner is of sound mind and under no constraint or undue influence to enter into a life settlement contract; and (b) A document in which the insured consents to the release of his or her medical records to a life settlement provider, life insurance agent, or life settlement broker and, if the policy was issued less than two (2) years from the date of application for a life settlement contract, to the insurance company that issued the policy. (2) The insurer shall respond to a request for verification of coverage submitted by a life settlement provider or life settlement broker not later than thirty (30) calendar days after the date the request is received. The request for verification of coverage shall be made on a form approved by the commissioner. The insurer shall complete and issue the verification of coverage or indicate in which respects it is unable to respond. In its response, the insurer shall indicate whether, based on the medical evidence and documents provided, the insurer intends to pursue an investigation at that time regarding the validity of the insurance contract or possible fraud, and shall provide sufficient detail of all reasons for the investigation to the life settlement provider or life settlement broker. (3) Prior to or at the time of execution of the life settlement contract, the life settlement provider shall obtain a witnessed document in which the owner consents to the life settlement contract, represents that he or she has a full and complete understanding of the life settlement contract and a full and complete understanding of the benefits of the policy, and acknowledges that he or she has entered into the life settlement contract freely and voluntarily and, for persons with a terminal or chronic illness or condition, that the terminal or chronic illness or condition was diagnosed after the policy was issued. (4) All medical information solicited or obtained by any licensee shall be subject to the applicable provision of state law relating to confidentiality of medical information. (5) All life settlement contracts entered into in this state shall contain an unconditional right to rescind a life settlement contract before the earlier of thirty (30) calendar days after the date it is executed or fifteen (15) calendar days after the date of receipt of the proceeds of the life settlement contract by the owner. If exercised by the owner, rescission is effective only if both notice of the rescission is given, and within the rescission period all proceeds, and any premiums, loans, and loan interest are repaid to the life settlement provider. If the insured dies during the rescission period, the life settlement contract shall be deemed to have been rescinded subject to repayment of all proceeds and any premiums, loans, and loan interest to the life settlement provider. The life settlement provider shall effectuate the change of ownership of the policy or certificate to the owner immediately upon effective rescission by the owner. (6) The independent third-party trustee shall transfer the proceeds that are due to the owner within two (2) business days upon receipt of acknowledgment of the transfer of ownership from the insurer. (7) Failure to tender consideration to the owner for the life settlement contract by the date disclosed renders the life settlement contract voidable by the owner for lack of consideration until the time consideration is tendered to and accepted by the owner. (8) Contacts with the insured for the purpose of determining the health status of the insured after the execution of the life settlement contract shall only be made by the life settlement provider or its authorized representative and shall be limited to once every three (3) months for an insured with a life expectancy of more than one (1) year, and to no more than once per month for an insured with a life expectancy of one (1) year or less. The life settlement provider shall explain the procedure for these contacts at the time the life settlement contract is entered into. The limitations set forth in this subsection shall not apply to any contacts with an insured for reasons other than determining the insured's health status. Life settlement providers shall be responsible for the actions of their authorized representatives. (9) The insurer shall not unreasonably delay effecting change of ownership or beneficiary with any life settlement contract lawfully entered into in the Commonwealth or with a resident of the Commonwealth. (10) If a life settlement broker performs any activities required of the provider under this section, the provider is deemed to have fulfilled those requirements of this section that have been properly performed by the broker. (11) If a life settlement broker performs any of the disclosure activities required of the provider under KRS 304.15-710, the provider is deemed to have fulfilled those requirements of KRS 304.15-710 that have been properly performed by the broker. (12) Within twenty (20) days after an owner executes the life settlement contract, the provider shall give written notice to the insurer that issued that insurance policy that the policy has become subject to a life settlement contract. The notice shall be accompanied by the documents required by KRS 304.15-702(1)(b). (13) Any fee paid by a provider, party, individual, or an owner to a broker in exchange for services provided to the owner pertaining to a life settlement contract shall be computed as a percentage of the offer obtained, not the face value of the policy. Nothing in this section shall be construed as prohibiting a broker from reducing such broker's fee below this percentage if the broker so chooses. (14) The broker shall disclose to the owner anything of value paid or given to a broker which relates to a life settlement contract. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1196, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 32, sec. 6, effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 10, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 472, sec. 4, effective July 14, 2000. -- Created 1998 Ky. Acts ch. 403, sec. 5, effective July 15, 1998. Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 32 intended to change all existing references in the KRS from "viatical settlement" to "life settlement." One reference to "viatical settlement" in this section was overlooked during the bill drafting process. The Reviser of Statutes has made this change upon the authority of KRS 7.136(1)(h). Legislative Research Commission Note (6/20/2005). Under the authority of KRS 7.136(1)(h), during codification a manifest clerical or typographical error occurring in 2005 Ky. Acts ch. 58, sec. 10(5) has been corrected. It is clear from the context and legislative history of the Act that the words "and within the rescission period" were misplaced within the sentence in which they occur, and the correct placement within the sentence has been effectuated during codification.

KRS 304.15-716 Violation due to time of contract -- Conditions -- Procedure -- Satisfaction of requirements

304.15-716. Violation due to time of contract -- Conditions -- Procedure -- Satisfaction of requirements (1) It is a violation of this subtitle for a person to enter into a life settlement contract at any time prior to, or at the time of application for, issuance of a policy, or within a two (2) year period commencing with the date of issuance of the policy unless the owner certifies to the life settlement provider that one (1) or more of the following conditions has been met within the two (2) year period: (a) The policy was issued upon the owner's exercise of conversion rights arising out of a group or individual policy, if the total of the time covered under the conversion policy plus the time covered under the prior policy is at least twenty-four (24) months. The time covered under a group policy shall be calculated without regard to a change in insurance carriers, if the coverage has been continuous and under the same group sponsorship; or (b) The owner submits independent evidence to the life settlement provider that one (1) or more of the following conditions has been met within the two (2) year period: 1. The owner or insured is terminally or chronically ill; 2. The owner or insured disposes of his ownership interests 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; 3. The owner's spouse dies; 4. The owner divorces his or her spouse; 5. The owner retires from full-time employment; 6. The owner becomes physically or mentally disabled and a physician determines that the disability prevents the owner from maintaining full- time employment; or 7. A final order, judgment, or decree is entered by a court of competent jurisdiction, on the application of the creditor of the owner, adjudicating the owner bankrupt or insolvent, or approving a petition seeking reorganization of the owner or appointing a receiver, trustee, or liquidator to all or a substantial part of the owner's assets. (2) Copies of the independent evidence described in subsection (1) of this section and the documents required by KRS 304.15-710 shall be submitted to the insurer when the life settlement provider 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. (3) If the life settlement provider submits to the insurer a copy of independent evidence provided for in subsection (2) of this section when the life settlement provider submits a request to the insurer to effect the transfer of the policy to the life settlement provider, the copy shall be deemed to conclusively establish that the life settlement contract satisfies the requirements of this section and the insurer shall respond timely to the request. Effective: July 15, 2008 History: Amended 2008 Ky. Acts ch. 32, sec. 7, effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 11, effective June 20, 2005. -- Created 2000 Ky. Acts ch. 472, sec. 10, effective July 14, 2000. Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 32 intended to change all existing references in the KRS from "viator" to "owner." One reference to "viator's" in this section was overlooked during the bill drafting process. The Reviser of Statutes has made this change upon the authority of KRS 7.136(1)(h).

KRS 304.15-717 Circumstances under which life settlement transactions are unlawful -- Required statement regarding false information -- Furnishing information regarding fraudulent life settlement acts

304.15-717. Circumstances under which life settlement transactions are unlawful -- Required statement regarding false information -- Furnishing information regarding fraudulent life settlement acts (1) It is unlawful for any person: (a) To knowingly or intentionally enter into a life settlement contract when the subject life insurance policy was obtained by means of a false, deceptive, or misleading application for the life insurance policy; (b) To knowingly or intentionally interfere with the enforcement of the provisions of this subtitle or investigations of suspected or actual violations of this subtitle; (c) To knowingly or intentionally permit a person convicted of a felony involving dishonesty or breach of trust to participate in the business of life settlements as defined in KRS 304.15-020(5); (d) To commit a fraudulent life settlement act; (e) To misrepresent that the life settlement provider, life settlement broker, other licensee, or any other person has been guaranteed, sponsored, recommended, or approved by the state, or by any local, state, or federal agency or officer thereof; (f) To act as a life settlement broker if the person is acting as a life settlement provider in the same life settlement contract; (g) For any person to pay any compensation or provide anything of value to an insured's physician, attorney, accountant, or any other person who provides medical, legal, or financial advice to the insured as a finder's or referral fee; (h) To engage in any transaction, practice, or course of business if such person knows or reasonably should have known that the intent was to avoid the notice requirements of KRS 304.15-020 and 304.15-700 to 304.15-720; (i) To engage in any fraudulent act or practice in connection with any transaction relating to any settlement involving an owner who is a resident of this state; (j) To issue, solicit, market, or otherwise promote the purchase of a life insurance policy for the sole purpose of or with a primary emphasis on settling the policy; (k) To enter into a life settlement contact on a policy that was the subject of a premium finance agreement as described in KRS 304.15-020(17)(b)2.; (l) With respect to any life settlement contract or life insurance policy and a broker, to knowingly solicit an offer from, effectuate a life settlement contract with or make a sale to any provider, financing entity, or related provider trust, or any insurer that is controlling, controlled by, or under common control with such broker unless disclosed to the owner; (m) With respect to any life settlement contract or life insurance policy and a provider, to knowingly enter into a life settlement contract with an owner if, in connection with such life settlement contract, anything of value will be paid to a broker or provider that is controlling, controlled by, or under common control with such provider, the financing entity, or related provider trust that is involved in such life settlement, or any insurer unless disclosed to the owner; (n) With respect to a provider, to enter into a life settlement contract unless the life settlement promotional, advertising, and marketing materials, as may be prescribed by administrative regulation, have been filed with the commissioner. Marketing materials shall not expressly reference that the insurance is "free" for any period of time. The inclusion of any reference in the marketing materials that would cause an owner to reasonably believe that the insurance is free for any period of time shall be considered a violation of KRS 304.15-700 to 304.15-720; (o) With respect to any insurance company, insurance producer, broker, or provider, or any other person, to make any statement or representation to the applicant or policyholder in connection with the sale or financing of a life insurance policy to the effect that the insurance is free or without cost to the policyholder for any period of time unless provided in the policy; or (p) If an insurer, to: 1. Engage in or permit any discrimination between individuals of the same class, same policy amount, and equal expectation of life in the rates charged for any life insurance policy or annuity contract based upon an individual's having entered into a life settlement contract or being insured under a settled policy; 2. Make any false or misleading statement as to the business of life settlements or financing premiums due for a policy or to any owner or insured for the purpose of inducing or tending to induce the owner or insured not to enter into a life settlement contract; or 3. Engage in any transaction, act, practice, or course of business, or dealing which restricts, limits, or impairs in any way the lawful transfer of ownership, change of beneficiary, or assignment of a policy. This subsection shall not prohibit a statement that the person is licensed, if that statement is true and the effect of the statement is not misrepresented. (2) A life settlement contract and an application for a life settlement contract, regardless of the form of transmission, shall contain the following statement or a substantially similar statement: "Any person who knowingly presents false information in an application for insurance or life settlement contract is guilty of a crime and upon conviction may be subject to fines or confinement in prison, or both." The lack of a statement required by this section does not constitute a defense in any prosecution for a fraudulent life settlement act. (3) (a) A person engaged in the business of life settlements who has knowledge or a reasonable belief that a fraudulent life settlement act is being, will be, or has been committed shall provide the information required to the commissioner, in a manner prescribed by the commissioner. (b) Any person who has knowledge or a reasonable belief that a fraudulent life settlement act is being, will be, or has been committed may provide the information required to the commissioner, in a manner prescribed by the commissioner in administrative regulations. (4) (a) Civil liability may not be imposed on and a cause of action may not arise from a person's furnishing information concerning suspected, anticipated, or completed fraudulent life settlement acts, or suspected or completed fraudulent insurance acts, if the information is provided to or received from: 1. The commissioner or the commissioner's employees, agents, or representatives; 2. Federal, state, or local law enforcement or regulatory officials, or their employees, agents, or representatives; 3. A person involved in the prevention and detection of fraudulent life settlement acts or that person's agents, employees, or representatives; 4. The National Association of Insurance Commissioners (NAIC), the National Association of Securities Dealers (NASD), the North American Securities Administrators Association (NASAA), or their employees, agents, or representatives, or any other regulatory body overseeing life insurance or life settlement contracts; 5. The insurer that issued the policy covering the life of the insured; or 6. The licensee and any agents, employees, or representatives. (b) This subsection shall not apply to a statement made with actual malice. In an action brought against a person for filing a report or furnishing other information concerning a fraudulent life settlement act or a fraudulent insurance act, the party bringing the action shall plead specifically any allegation that this subsection shall not apply because the person filing the report or furnishing the information did so with actual malice. (c) A person who furnishes information concerning fraudulent life settlement acts and who is a party in a civil cause of action for libel, slander, or another relevant tort arising out of activities in carrying out the provisions of this chapter shall be entitled to an award of attorney's fees and court costs if he is the prevailing party in the suit and the party bringing the action was not substantially justified in filing the cause of action. For purposes of this paragraph, a proceeding is "substantially justified" if a person had a reasonable basis in law or fact at the time the cause of action was initiated. (d) This subsection shall not abrogate or modify common law or statutory privileges or immunities enjoyed by a person. (e) This subsection shall not apply to a person who furnishes information concerning his own suspected, anticipated, or completed fraudulent life settlement acts or suspected, anticipated, or completed fraudulent insurance acts. (5) The documents and evidence provided pursuant to subsection (4) of this section or obtained by the commissioner in an investigation of suspected or actual fraudulent life settlement acts shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action, except that: (a) This subsection shall not prohibit release by the commissioner of documents and evidence obtained in an investigation of suspected or actual fraudulent life settlement acts: 1. In administrative or judicial proceedings to enforce laws administered by the commissioner; 2. To federal, state, or local law enforcement or regulatory agencies, to an organization established for the purpose of detecting and preventing fraudulent life settlement acts, or to the National Association of Insurance Commissioners (NAIC); or 3. At the discretion of the commissioner, to a person in the business of life settlements that is aggrieved by a fraudulent life settlement act; and (b) The release of documents and evidence provided by paragraph (a) of this subsection shall not abrogate or modify the privilege granted by this subsection. (6) This section shall not: (a) Preempt the authority or relieve the duty of other law enforcement or regulatory agencies to investigate, examine, and prosecute suspected violations of law; (b) Prevent or prohibit a person from voluntarily disclosing information concerning fraudulent life settlement acts to a law enforcement or regulatory agency other than the Department of Insurance; (c) Limit the powers granted elsewhere by the laws of this state to the commissioner or an insurance fraud unit to investigate and examine possible violations of law and to take appropriate action against wrongdoers; or (d) Preempt, supersede, or limit any provision of any state securities law or any rule, order, administrative regulation, or notice issued thereunder. (7) A life settlement provider shall adopt antifraud initiatives reasonably calculated to detect, prosecute, and prevent fraudulent life settlement acts. The commissioner may order or, if a licensee requests, may grant modifications of the required initiatives listed in this subsection as necessary to ensure an effective antifraud program. The modifications may be more or less restrictive than the required initiatives so long as the modifications reasonably may be expected to accomplish the purpose of this section. Antifraud initiatives shall include the following: (a) Fraud investigators, who may be life settlement providers or employees or independent contractors of those life settlement providers; and (b) An antifraud plan that shall be filed with the commissioner and that shall include but is not limited to the following: 1. The procedures for detecting and investigating possible fraudulent life settlement acts and procedures for resolving material inconsistencies between medical records and insurance applications; 2. The procedures for reporting possible fraudulent life settlement acts to the commissioner; 3. The plan for antifraud education and training of underwriters and other personnel; and 4. A chart outlining the organizational arrangement of the antifraud personnel who are responsible for the investigation and reporting of possible fraudulent life settlement acts and investigating unresolved material inconsistencies between medical records and insurance applications. Antifraud plans filed with the commissioner shall be privileged and confidential and shall not be a public record and shall not be subject to discovery or subpoena in a civil or criminal action. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1197, effective July 15, 2010; and ch. 166, sec. 8, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 32, sec. 8, effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 12, effective June 20, 2005. -- Created 2000 Ky. Acts ch. 472, sec. 6, effective July 14, 2000. Legislative Research Commission Note (7/15/2010). This section was amended by 2010 Ky. Acts chs. 24 and 166, which do not appear to be in conflict and have been codified together. Legislative Research Commission Note (7/15/2010). During codification of 2008 Ky. Acts ch. 32, the Reviser of Statutes renumbered the subdivisions of KRS 304.15- 020(17), which was Section 1 of that Act, but neglected to make a conforming change to a citation to that statute in subsection (1)(k) of this section, which was Section 8 of that Act. The conforming change to "KRS 304.15-020(17)(b)2." has now been made under the authority of KRS 7.136(1)(e). Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 32 intended to change all existing references in the KRS from "viatical settlements" to "life settlements." One reference to "viatical settlement" in this section was overlooked during the bill drafting process. The Reviser of Statutes has made this change upon the authority of KRS 7.136(1)(h).

KRS 304.15-718 Requirements governing execution of life settlement contracts

304.15-718. Requirements governing execution of life settlement contracts The life settlement provider shall instruct the owner to send the executed documents required to effect the change in ownership, assignment, or change in beneficiary directly to the independent escrow agent. Within three (3) business days after the date the escrow agent receives the document, or from the date the life settlement provider receives the documents, if the owner erroneously sends the documents directly to the provider, the life settlement provider shall pay the proceeds due to the owner to an escrow or trust account maintained in a state or federally chartered financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Upon payment of the settlement proceeds into the escrow account, the escrow agent shall deliver the original change in ownership, assignment, or change in beneficiary forms to the life settlement provider or related provider trust. Upon the escrow agent's receipt of the acknowledgment of the properly completed transfer of ownership, assignment, or designation of beneficiary from the insurance company, the escrow agent shall pay the settlement proceeds to the owner. Effective: July 15, 2008 History: Amended 2008 Ky. Acts ch. 32, sec. 22, effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 13, effective June 20, 2005. -- Created 2000 Ky. Acts ch. 472, sec. 7, effective July 14, 2000.

KRS 304.15-719 Annual statement to be filed with commissioner -- Administrative regulations

304.15-719. Annual statement to be filed with commissioner -- Administrative regulations Each provider shall file with the commissioner on or before March 1 of each year an annual statement containing such information as the commissioner may prescribe by administrative regulation. In addition to any other requirements, the annual statement of each provider shall also include the names of the insurance companies whose policies have been settled. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1198, effective July 15, 2010. -- Created 2008 Ky. Acts ch. 32, sec. 9, effective July 15, 2008.

KRS 304.15-720 Powers of commissioner

304.15-720. Powers of commissioner The commissioner shall have the authority to: (1) Promulgate administrative regulations in accordance with KRS Chapter 13A implementing KRS 304.15-020 and 304.15-700 to 304.15-720; (2) Establish standards for evaluating reasonableness of payments under life settlement contracts where the insured under the policy which is the subject of a life settlement contract is terminally or chronically ill. This authority includes but is not limited to regulation of discount rates used to determine the amount paid in exchange for assignment, transfer, sale, devise, or bequest of a benefit under a policy. A life settlement provider, where the insured is not terminally or chronically ill, shall pay an amount greater than the cash surrender value or accelerated death benefit then available; (3) Establish appropriate licensing requirements and fees for agents and brokers; and (4) Promulgate administrative regulations governing the relationship and responsibilities of an insurer and a life settlement provider, life insurance producer, and others in the business of life settlements during the period of consideration or effectuation of a life settlement contract. Effective: July 15, 2010 History: Amended 2010 Ky. Acts ch. 24, sec. 1199, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 32, sec. 23, effective July 15, 2008. -- Amended 2005 Ky. Acts ch. 58, sec. 14, effective June 20, 2005. -- Created 1998 Ky. Acts ch. 403, sec. 6, effective July 15, 1998.

KRS 304.15-725 KRS 304.15-020 and KRS 304.15-700 to 304.15-720 subject to Subtitle 12 of this chapter

304.15-725. KRS 304.15-020 and KRS 304.15-700 to 304.15-720 subject to Subtitle 12 of this chapter The activities regulated by KRS 304.15-020 and KRS 304.15-700 to 304.15-720 shall be deemed the business of insurance and subject to Subtitle 12 of this chapter. Effective: July 15, 1998 History: Created 1998 Ky. Acts ch. 403, sec. 7, effective July 15, 1998.

KRS 304.15-726 Life settlement contracts for payments directly to long-term care services providers -- Administrative regulations

304.15-726. Life settlement contracts for payments directly to long-term care services providers -- Administrative regulations (1) For purposes of this section: (a) "Long-term care services" means: 1. Home health care; 2. Assisted living; 3. Nursing home care; and 4. Any other service or support deemed a long-term care service pursuant to administrative regulations promulgated by the Department for Medicaid Services; and (b) "Recipient" means the recipient of the long-term care services that are being paid for from the proceeds of the life settlement contract entered into pursuant to this section. (2) The owner of a life insurance policy with a face value in excess of ten thousand dollars ($10,000) may enter into a life settlement contract pursuant to KRS 304.15- 700 to 304.15-720, in exchange for payments directly to a long-term care services provider as of the effective date of the life settlement contract in accordance with this section. (3) (a) All proceeds of the life settlement contract entered into pursuant to this section shall: 1. Not be subject to any statute or administrative regulation relating to minimum payments for a life settlement which conflict with the provisions of this section; and 2. Be held in an irrevocable state or federally insured account for the benefit of the recipient of the long-term care services and administered in accordance with this section. (b) The type of long-term care services payable from the irrevocable account shall be chosen only by the recipient of the services. Any attempt by any person to require the use of a long-term care services provider to obtain long-term care services pursuant to this section is prohibited and shall constitute an unfair or deceptive act or practice in violation of KRS 304.12-010. (c) In addition to the requirements in KRS 304.15-700 to 304.15-720, any life settlement contract entered into pursuant to this section shall include the following: 1. A provision in the contract that five percent (5%) of the face amount of the life insurance policy, not to exceed seven thousand five hundred dollars ($7,500), or five thousand dollars ($5,000), whichever is greater, may be reserved and if reserved shall be payable to the owner's estate or a named beneficiary of the irrevocable account upon the death of the insured under the policy that is the subject of the life settlement contract for final expenses; and 2. The balance of proceeds of the life settlement contract that are unpaid at the death of the owner shall be paid to the owner's estate or a named beneficiary of the irrevocable account. (d) Any life settlement provider entering into a life settlement contract pursuant to this section shall maintain one (1) of the following: 1. A surety bond executed and issued by an insurer authorized to issue bonds in this state in the amount of five hundred thousand dollars ($500,000). Any surety bond issued shall be in favor of this state and shall specifically authorize recovery by the commissioner on behalf of any person in this state who sustained damages as the result of erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices by the life settlement provider; or 2. A policy of errors and omissions insurance covering legal liability resulting from erroneous acts or failure to act in their capacity as a life settlement provider in the sum of no less than five hundred thousand dollars ($500,000) per occurrence and in the aggregate. (e) For purposes of this section, in addition to any requirements of KRS 304.15- 700 to 304.15-720: 1. Life settlement contract forms entered into pursuant to this section shall be filed and approved by the department; and 2. Advertising and marketing materials used by a life settlement provider pursuant to this section shall be filed with the department. (f) Any claim against a life settlement provider from an owner of a policy, the owner's estate, any beneficiary, or any other person with respect to the life settlement contract shall not exceed the face amount of the policy, less the proceeds paid under the life settlement contract, the total amount of premiums paid subsequent to entering into the life settlement contract, and any other reasonable costs or expenses associated with the acquisition or maintenance of the policy that is the subject of a life settlement contract. Any payment of a claim by a life settlement provider shall be made from the funds established pursuant to paragraph (a)2. of this subsection. (g) The department shall conduct periodic market examinations of each life settlement provider regarding the life settlement contracts entered into pursuant to this section in accordance with KRS 304.15-705. (4) Nothing in this section shall be the exclusive method for a life insurance policy to be excluded as a resource or asset in determining the applicant's or recipient's eligibility for Medicaid. (5) The commissioner may promulgate administrative regulations to implement this section. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 60, sec. 1, effective July 15, 2014.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38711Fetched: 10/20/2026