HB632 Alabama 2010 Session

Summary

Primary Sponsor

Thad McClammy

Democrat

Co-Sponsors

Oliver RobinsonWilliam E. ThigpenJames C. FieldsJoe HubbardGreg Wren

Session

Regular Session 2010

Title

Life settlement contracts, providers, licensure and regulation, enforcement by Commissioner of Insurance Department, criminal and civil penalties, Life Settlements Act

Summary

HB632 creates a Life Settlements Act to license providers and brokers, regulate life settlement contracts, and protect Alabama consumers.

What This Bill Does

It requires licensing for life settlement providers and brokers with defined requirements and fees, and gives the Insurance Commissioner authority to suspend, revoke, or deny licenses. It requires life settlement contracts and related forms to be filed with and approved by the Commissioner, and it mandates annual reports from providers and regular examinations of licensees. It allows advertising but imposes disclosures, requires written signed disclosures, and establishes rules and penalties for violations, including criminal and civil penalties. It also provides consumer protections such as disclosures about alternatives and tax or creditor implications, a 30-day rescission period, escrow of proceeds, anti-fraud measures, privacy protections, and limits on practices like stranger-originated life insurance.

Who It Affects

• Providers and brokers of life settlement contracts: must obtain and maintain licenses, follow reporting, advertising, and disclosure requirements, and be subject to examinations, investigations, and penalties for violations.
• Policy owners/insureds in Alabama: receive required disclosures about life settlements, know their rights (including a 30-day rescission period), and have protection against certain abusive practices; their sensitive information is protected and used only for approved purposes.

Key Provisions

• Licensure of providers and brokers with defined terms,资格 fees, and license renewal; Commissioner may suspend, revoke, or refuse renewal for specified reasons.
• Contracts and forms: life settlement contracts and purchase agreements must be filed with and approved by the Commissioner; providers must file annual statements and reports; Commissioner may examine licensees.
• Advertising and disclosures: providers may advertise but must disclose required information; written signed disclosures are required; forms and disclosures must be approved by the Commissioner.
• Consumer protections: owners must be informed of alternatives to life settlements, potential tax and creditor implications, and right to rescind within 30 days; a buyer’s guide and clear disclosures are required.
• Anti-fraud and confidentiality: providers and brokers must implement anti-fraud plans and investigations; confidential handling of owner/insured information; penalties for fraudulent acts; examinations and records rules.
• Prohibition of certain practices: STOLI-like arrangements are restricted; law governs cross-state transactions with protections based on ownership and insurable interest.
• Escrow and funds handling: settlement proceeds may be held in escrow/trust accounts and disbursed within specified timelines; changes of ownership/beneficiary must be timely and properly documented.
• Enforcement and remedies: the Act provides for injunctions, civil damages, cease-and-desist orders, and penalties for violations; hearings and administrative procedures are defined.
• Governing law and cross-state issues: where multiple owners reside in different states, the contract may be governed by the state of residence with the largest ownership stake; risk allocation and records requirements are specified for interstate transactions.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Life Settlement Contracts