<a id="pl.1.3"></a><var>1.3</var>life insurance;proposing coding for new law in Minnesota Statutes, chapter 60A; <br/>
<a id="pl.1.4"></a><var>1.4</var>repealing Minnesota Statutes 2008, sections 61A.073; 61A.074.<br/>
<a id="pl.1.5"></a><var>1.5</var>BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:<br/>
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<a id="bill.0.1.0"></a><a id="pl.1.6"></a><var>1.6</var>    Section 1. <b>[60A.078] SHORT TITLE.</b><br/>
<a id="pl.1.7"></a><var>1.7</var>Sections 60A.078 to 60A.0789 may be cited as the "Insurable Interest Act."<br/>
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<a id="bill.0.2.0"></a><a id="pl.1.8"></a><var>1.8</var>    Sec. 2. <b>[60A.0782] DEFINITIONS.</b><br/>
<a id="pl.1.9"></a><var>1.9</var>    Subdivision 1. <b>Terms.</b> For the purpose of this act, unless the context clearly <br/>
<a id="pl.1.10"></a><var>1.10</var>indicates otherwise, the terms in this section have the meanings given them.<br/>
<a id="pl.1.11"></a><var>1.11</var>    Subd. 2. <b>Act.</b> "Act" means sections 60A.078 to 60A.0789.<br/>
<a id="pl.1.12"></a><var>1.12</var>    Subd. 3. <b>Business entity.</b> "Business entity" includes, but is not limited to, a joint <br/>
<a id="pl.1.13"></a><var>1.13</var>venture, partnership, corporation, limited liability company, and business trust.<br/>
<a id="pl.1.14"></a><var>1.14</var>    Subd. 4. <b>Commissioner.</b> "Commissioner" means the commissioner of commerce.<br/>
<a id="pl.1.15"></a><var>1.15</var>    Subd. 5. <b>Legitimate settlement contracts.</b> "Legitimate settlement contracts" <br/>
<a id="pl.1.16"></a><var>1.16</var>mean settlement contracts that comply with Minnesota law governing viatical settlement <br/>
<a id="pl.1.17"></a><var>1.17</var>contracts and that are not prohibited by section 60A.0785 or otherwise part of or in <br/>
<a id="pl.1.18"></a><var>1.18</var>furtherance of an act, practice, or arrangement that is prohibited by this act.<br/>
<a id="pl.1.19"></a><var>1.19</var>    Subd. 6. <b>Life expectancy evaluation.</b> "Life expectancy evaluation" means an <br/>
<a id="pl.1.20"></a><var>1.20</var>evaluation conducted by any person other than the insurer or its authorized representatives <br/>
<a id="pl.1.21"></a><var>1.21</var>for the purpose of projecting or estimating how long a particular individual is expected to <br/>
<a id="pl.1.22"></a><var>1.22</var>live. <br/>
<a id="pl.2.1"></a><var>2.1</var>    Subd. 7. <b>Person.</b> "Person" means any natural person or legal entity, including, but <br/>
<a id="pl.2.2"></a><var>2.2</var>not limited to, a partnership, limited liability company, association, trust, or corporation.<br/>
<a id="pl.2.3"></a><var>2.3</var>    Subd. 8. <b>Policy.</b> "Policy" means an individual or group policy, group certificate, <br/>
<a id="pl.2.4"></a><var>2.4</var>contract, or arrangement of life insurance affecting the rights of a resident of this state <br/>
<a id="pl.2.5"></a><var>2.5</var>or bearing a reasonable relation to this state, regardless of whether delivered or issued <br/>
<a id="pl.2.6"></a><var>2.6</var>for delivery in this state.<br/>
<a id="pl.2.7"></a><var>2.7</var>    Subd. 9. <b>Policyowner.</b> "Policyowner" means the owner of a policy.<br/>
<a id="pl.2.8"></a><var>2.8</var>    Subd. 10. <b>Settlement contract.</b> (a) "Settlement contract" means an agreement <br/>
<a id="pl.2.9"></a><var>2.9</var>between a policyowner and another person establishing the terms under which <br/>
<a id="pl.2.10"></a><var>2.10</var>compensation or anything of value will be paid or which compensation or value is <br/>
<a id="pl.2.11"></a><var>2.11</var>less than the expected death benefit of the insurance policy, in return for the owner's <br/>
<a id="pl.2.12"></a><var>2.12</var>assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any <br/>
<a id="pl.2.13"></a><var>2.13</var>portion of the policy. Settlement contract also includes:<br/>
<a id="pl.2.14"></a><var>2.14</var>(1) the transfer for compensation or value of ownership or beneficial interest in a <br/>
<a id="pl.2.15"></a><var>2.15</var>trust or other entity that owns such a policy if the trust or other entity was formed or <br/>
<a id="pl.2.16"></a><var>2.16</var>availed of for the principal purpose of acquiring one or more policies, which policy insures <br/>
<a id="pl.2.17"></a><var>2.17</var>the life of an individual who is a resident of this state; and<br/>
<a id="pl.2.18"></a><var>2.18</var>(2) a premium finance loan made for a policy by a lender to a policyowner on, <br/>
<a id="pl.2.19"></a><var>2.19</var>before, or after the date of issuance of the policy where:<br/>
<a id="pl.2.20"></a><var>2.20</var>(i) the policyowner or the insured receives a guarantee of a future settlement value <br/>
<a id="pl.2.21"></a><var>2.21</var>of the policy; or<br/>
<a id="pl.2.22"></a><var>2.22</var>(ii) the policyowner or the insured agrees to sell the policy or any portion of its death <br/>
<a id="pl.2.23"></a><var>2.23</var>benefit on any date following the issuance of the policy.<br/>
<a id="pl.2.24"></a><var>2.24</var>(b) Settlement contract does not include:<br/>
<a id="pl.2.25"></a><var>2.25</var>(1) a policy loan or accelerated death benefit made by the insurer under the policy's <br/>
<a id="pl.2.26"></a><var>2.26</var>terms;<br/>
<a id="pl.2.27"></a><var>2.27</var>(2) a premium finance loan in which loan proceeds are used solely to pay premiums <br/>
<a id="pl.2.28"></a><var>2.28</var>for the policy and loan-related costs, including, without limitation, interest, arrangement <br/>
<a id="pl.2.29"></a><var>2.29</var>fees, utilization fees and similar fees, closing costs, legal fees and expenses, trustee <br/>
<a id="pl.2.30"></a><var>2.30</var>fees and expenses, and third-party collateral provider fees and expenses, including fees <br/>
<a id="pl.2.31"></a><var>2.31</var>payable to letter of credit issuers;<br/>
<a id="pl.2.32"></a><var>2.32</var>(3) a loan made by a bank or other licensed financial institution in which the lender <br/>
<a id="pl.2.33"></a><var>2.33</var>takes an interest in a policy solely to secure repayment of a loan or, if there is a default <br/>
<a id="pl.2.34"></a><var>2.34</var>on the loan and the policy is transferred, the transfer of such a policy by the lender, as <br/>
<a id="pl.2.35"></a><var>2.35</var>long as the default itself is not pursuant to an agreement or understanding with any other <br/>
<a id="pl.2.36"></a><var>2.36</var>person for the purpose of evading regulation under this act;<br/>
<a id="pl.3.1"></a><var>3.1</var>(4) an agreement in which all the parties are closely related to the insured by blood <br/>
<a id="pl.3.2"></a><var>3.2</var>or law or have a lawful substantial economic interest in the continued life, health, and <br/>
<a id="pl.3.3"></a><var>3.3</var>bodily safety of the person insured or are trusts established for the benefit of such parties;<br/>
<a id="pl.3.4"></a><var>3.4</var>(5) any designation, consent, or agreement by an insured who is an employee or an <br/>
<a id="pl.3.5"></a><var>3.5</var>employer in connection with the purchase by the employer, or by a trust established by the <br/>
<a id="pl.3.6"></a><var>3.6</var>employer, of life insurance on the life of the employee;<br/>
<a id="pl.3.7"></a><var>3.7</var>(6) a bona fide business succession planning arrangement:<br/>
<a id="pl.3.8"></a><var>3.8</var>(i) between shareholders in a corporation or between a corporation and one or more <br/>
<a id="pl.3.9"></a><var>3.9</var>of its shareholders or one or more trusts established by its shareholders;<br/>
<a id="pl.3.10"></a><var>3.10</var>(ii) between partners in a partnership or between a partnership and one or more of its <br/>
<a id="pl.3.11"></a><var>3.11</var>partners or one or more trusts established by its partner; or<br/>
<a id="pl.3.12"></a><var>3.12</var>(iii) between members in a limited liability company or between a limited liability <br/>
<a id="pl.3.13"></a><var>3.13</var>company and one or more of its members or one or more trusts established by its <br/>
<a id="pl.3.14"></a><var>3.14</var>members; or<br/>
<a id="pl.3.15"></a><var>3.15</var>(7) an agreement entered into by a service recipient, or a trust established by the <br/>
<a id="pl.3.16"></a><var>3.16</var>service recipient, and a service provider, or a trust established by the service provider, who <br/>
<a id="pl.3.17"></a><var>3.17</var>performs significant services for the service recipient's trade or business.<br/>
<a id="pl.3.18"></a><var>3.18</var>    Subd. 11. <b>Stranger-originated life insurance practices.</b> "Stranger-originated life <br/>
<a id="pl.3.19"></a><var>3.19</var>insurance practices" or "STOLI practices" mean an act, practice, or arrangement to initiate <br/>
<a id="pl.3.20"></a><var>3.20</var>a life insurance policy for the benefit of a third-party investor who, at the time of policy <br/>
<a id="pl.3.21"></a><var>3.21</var>origination, has no insurable interest in the insured. STOLI practices include, but are not <br/>
<a id="pl.3.22"></a><var>3.22</var>limited to, cases in which life insurance is purchased with resources or guarantees from or <br/>
<a id="pl.3.23"></a><var>3.23</var>through a person or entity, who, at the time of policy inception, could not lawfully initiate <br/>
<a id="pl.3.24"></a><var>3.24</var>the policy themselves, and where, at the time of inception, there is an arrangement or <br/>
<a id="pl.3.25"></a><var>3.25</var>agreement, whether spoken or written, to directly or indirectly transfer the ownership of <br/>
<a id="pl.3.26"></a><var>3.26</var>the policy and/or the policy benefits to a third party. Trusts that are created to give the <br/>
<a id="pl.3.27"></a><var>3.27</var>appearance of insurable interest and are used to initiate policies for investors violate the <br/>
<a id="pl.3.28"></a><var>3.28</var>insurable interest requirements and the prohibition against STOLI practices.<br/>
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<a id="bill.0.3.0"></a><a id="pl.3.29"></a><var>3.29</var>    Sec. 3. <b>[60A.0783] INSURABLE INTEREST REQUIRED.</b><br/>
<a id="pl.3.30"></a><var>3.30</var>    Subdivision 1. <b>Insurance on life of another.</b> A person may not procure or cause <br/>
<a id="pl.3.31"></a><var>3.31</var>to be procured or effected a policy upon the life of another individual unless the benefits <br/>
<a id="pl.3.32"></a><var>3.32</var>under the policy are payable to the insured, the personal representatives of the insured's <br/>
<a id="pl.3.33"></a><var>3.33</var>estate, or to a person having, at the time the policy is issued, an insurable interest in the <br/>
<a id="pl.3.34"></a><var>3.34</var>individual insured.<br/>
<a id="pl.4.1"></a><var>4.1</var>    Subd. 2. <b>What constitutes an insurable interest.</b> Insurable interest, with reference <br/>
<a id="pl.4.2"></a><var>4.2</var>to insurance on the life of another, includes only the following interests.<br/>
<a id="pl.4.3"></a><var>4.3</var>(a) An individual has an insurable interest in the life of another person to whom the <br/>
<a id="pl.4.4"></a><var>4.4</var>individual is closely related by blood or by law or in whom the individual has a substantial <br/>
<a id="pl.4.5"></a><var>4.5</var>interest engendered by love and affection.<br/>
<a id="pl.4.6"></a><var>4.6</var>(b) An individual has an insurable interest in the life of another person if such <br/>
<a id="pl.4.7"></a><var>4.7</var>individual has a lawful and substantial economic interest in the continued life of the <br/>
<a id="pl.4.8"></a><var>4.8</var>individual insured, as distinguished from an interest that would arise only by or would be <br/>
<a id="pl.4.9"></a><var>4.9</var>enhanced in value by the death of the individual insured.<br/>
<a id="pl.4.10"></a><var>4.10</var>(c) An individual party to a contract for the purchase or sale of an interest in any <br/>
<a id="pl.4.11"></a><var>4.11</var>business entity and, if applicable, a trust or the trustee of a trust of which the individual is <br/>
<a id="pl.4.12"></a><var>4.12</var>a settlor, has an insurable interest in the life of each other individual party to the contract, <br/>
<a id="pl.4.13"></a><var>4.13</var>but only for the purpose of carrying out the intent and purpose of the contract.<br/>
<a id="pl.4.14"></a><var>4.14</var>(d) A trust, or the trustee of a trust, has an insurable interest in the life of an <br/>
<a id="pl.4.15"></a><var>4.15</var>individual insured under a life insurance policy owned by the trust, or the trustee of the <br/>
<a id="pl.4.16"></a><var>4.16</var>trust acting in a fiduciary capacity, if the insured is the settlor of the trust; an individual <br/>
<a id="pl.4.17"></a><var>4.17</var>closely related by blood or law to the settlor; or an individual in whom the settlor otherwise <br/>
<a id="pl.4.18"></a><var>4.18</var>has an insurable interest if, in each of the situations described in this paragraph, the life <br/>
<a id="pl.4.19"></a><var>4.19</var>insurance proceeds are primarily for the benefit of trust beneficiaries having an insurable <br/>
<a id="pl.4.20"></a><var>4.20</var>interest in the life of the insured and the trust is not used, directly or indirectly, as part of or <br/>
<a id="pl.4.21"></a><var>4.21</var>in furtherance of an act, practice, or arrangement that is otherwise prohibited by this act.<br/>
<a id="pl.4.22"></a><var>4.22</var>(e) A guardian, trustee, or other fiduciary, acting in a fiduciary capacity, has an <br/>
<a id="pl.4.23"></a><var>4.23</var>insurable interest in the life of any person for whose benefit the fiduciary holds property, <br/>
<a id="pl.4.24"></a><var>4.24</var>and in the life of any other individual in whose life the person has an insurable interest so <br/>
<a id="pl.4.25"></a><var>4.25</var>long as the life insurance proceeds are used primarily for the benefit of persons having an <br/>
<a id="pl.4.26"></a><var>4.26</var>insurable interest in the life of the insured and the guardianship or fiduciary relationship <br/>
<a id="pl.4.27"></a><var>4.27</var>is not used, directly or indirectly, as part of or in furtherance of an act, practice, or <br/>
<a id="pl.4.28"></a><var>4.28</var>arrangement that is otherwise prohibited by this act.<br/>
<a id="pl.4.29"></a><var>4.29</var>(f) An organization in section 170(c) of the United States Internal Revenue Code <br/>
<a id="pl.4.30"></a><var>4.30</var>of 1986, as amended through December 31, 2008, has an insurable interest in the life of <br/>
<a id="pl.4.31"></a><var>4.31</var>any person who consents in writing to the organization's ownership or purchase of that <br/>
<a id="pl.4.32"></a><var>4.32</var>insurance.<br/>
<a id="pl.4.33"></a><var>4.33</var>(g) A trustee, sponsor, or custodian of assets held in any plan governed by the <br/>
<a id="pl.4.34"></a><var>4.34</var>Employee Retirement Income Security Act of 1974, 29 United States Code, subsection <br/>
<a id="pl.4.35"></a><var>4.35</var>1001, et seq., or in any other retirement or employee benefit plan, has an insurable interest <br/>
<a id="pl.4.36"></a><var>4.36</var>in the life of any participant in the plan provided consent is obtained in writing from the <br/>
<a id="pl.5.1"></a><var>5.1</var>participant before the insurance is purchased. An employer, trustee, sponsor, or custodian <br/>
<a id="pl.5.2"></a><var>5.2</var>may not retaliate or take adverse action against any participant who does not consent to <br/>
<a id="pl.5.3"></a><var>5.3</var>the issuance of insurance on the participant's life.<br/>
<a id="pl.5.4"></a><var>5.4</var>(h) A business entity has an insurable interest in the life of any of the owners, <br/>
<a id="pl.5.5"></a><var>5.5</var>directors, officers, partners, and managers of the business entity or any affiliate or <br/>
<a id="pl.5.6"></a><var>5.6</var>subsidiary of the business entity, or key employees or key persons of the business entity <br/>
<a id="pl.5.7"></a><var>5.7</var>or affiliate or subsidiary, provided consent is obtained in writing from key employees or <br/>
<a id="pl.5.8"></a><var>5.8</var>persons before the insurance is purchased. The business entity or affiliate or subsidiary <br/>
<a id="pl.5.9"></a><var>5.9</var>may not retaliate or take adverse action against any key employee or person who does <br/>
<a id="pl.5.10"></a><var>5.10</var>not consent to the issuance of insurance on the key employee or key person's life. For <br/>
<a id="pl.5.11"></a><var>5.11</var>purposes of this subdivision, a "key employee" or "key person" means an individual <br/>
<a id="pl.5.12"></a><var>5.12</var>whose position or compensation is described in section 101(j)(2)(A)(ii) of the Internal <br/>
<a id="pl.5.13"></a><var>5.13</var>Revenue Code of 1986, as amended through December 31, 2008.<br/>
<a id="pl.5.14"></a><var>5.14</var>(i) A financial institution or other person to whom a debt is owed, whether for the <br/>
<a id="pl.5.15"></a><var>5.15</var>purposes of premium financing or otherwise, has an insurable interest in the life of the <br/>
<a id="pl.5.16"></a><var>5.16</var>borrower limited to the amount of debt owed plus reasonable interest and service charges.<br/>
<a id="pl.5.17"></a><var>5.17</var>    Subd. 3. <b>Insured's own life.</b> An individual has an insurable interest in their own life <br/>
<a id="pl.5.18"></a><var>5.18</var>and an individual of competent legal capacity that procures or effects a policy on their <br/>
<a id="pl.5.19"></a><var>5.19</var>own life may designate any person as the beneficiary, provided the policy is not part of or <br/>
<a id="pl.5.20"></a><var>5.20</var>in furtherance of an act, practice, or arrangement that is otherwise prohibited by this act.<br/>
<a id="pl.5.21"></a><var>5.21</var>    Subd. 4. <b>Reliance on statements.</b> An insurer is entitled to rely upon all reasonable <br/>
<a id="pl.5.22"></a><var>5.22</var>statements, declarations, and representations made by an applicant for life insurance <br/>
<a id="pl.5.23"></a><var>5.23</var>relative to the existence of an insurable interest; and no insurer shall incur legal <br/>
<a id="pl.5.24"></a><var>5.24</var>liability, except as set forth in the policy, by virtue of untrue statements, declarations, or <br/>
<a id="pl.5.25"></a><var>5.25</var>representations so relied upon in good faith by the insurer.<br/>
<a id="pl.5.26"></a><var>5.26</var>    Subd. 5. <b>Consent of insured.</b> A policy upon the life of an individual, other than <br/>
<a id="pl.5.27"></a><var>5.27</var>a policy of noncontributory group life insurance, may not be effectuated unless, on or <br/>
<a id="pl.5.28"></a><var>5.28</var>before the time the policy is effectuated, the individual insured, having legal capacity to <br/>
<a id="pl.5.29"></a><var>5.29</var>contract, applies for or consents in writing to the policy and its terms. Consent may be <br/>
<a id="pl.5.30"></a><var>5.30</var>given by another in the following cases:<br/>
<a id="pl.5.31"></a><var>5.31</var>(1) a parent or a person having legal custody of a minor may consent to the issuance <br/>
<a id="pl.5.32"></a><var>5.32</var>of a policy on a dependent child;<br/>
<a id="pl.5.33"></a><var>5.33</var>(2) a court-appointed guardian of a person may consent to the issuance of a policy <br/>
<a id="pl.5.34"></a><var>5.34</var>on the person under guardianship;<br/>
<a id="pl.5.35"></a><var>5.35</var>(3) a court-appointed conservator of a person's estate may consent to the issuance of <br/>
<a id="pl.5.36"></a><var>5.36</var>a policy on the person whose estate is under conservatorship;<br/>
<a id="pl.6.1"></a><var>6.1</var>(4) an attorney-in-fact may consent to the issuance of a policy on the person that <br/>
<a id="pl.6.2"></a><var>6.2</var>appointed the attorney-in-fact for the limited purpose of replacing one or more policies <br/>
<a id="pl.6.3"></a><var>6.3</var>with one or more new policies, provided the aggregate amount of life insurance on the <br/>
<a id="pl.6.4"></a><var>6.4</var>person as the result of the replacement remains the same or decreases;<br/>
<a id="pl.6.5"></a><var>6.5</var>(5) a trustee of a revocable trust may consent to the issuance of a policy on the <br/>
<a id="pl.6.6"></a><var>6.6</var>life of a settlor of the trust; and<br/>
<a id="pl.6.7"></a><var>6.7</var>(6) a court of general jurisdiction may give consent to the issuance of a policy upon <br/>
<a id="pl.6.8"></a><var>6.8</var>a showing of facts the court considers sufficient to justify the issuance of the policy.<br/>
<br/>
<a id="bill.0.4.0"></a><a id="pl.6.9"></a><var>6.9</var>    Sec. 4. <b>[60A.0784] PROHIBITED PRACTICES.</b><br/>
<a id="pl.6.10"></a><var>6.10</var>It is unlawful for any person to:<br/>
<a id="pl.6.11"></a><var>6.11</var>(1) procure or cause to be procured or effected a policy in violation of section <br/>
<a id="pl.6.12"></a><var>6.12</var>60A.0783;<br/>
<a id="pl.6.13"></a><var>6.13</var>(2) engage in STOLI practices or otherwise wager on life;<br/>
<a id="pl.6.14"></a><var>6.14</var>(3) solicit, market, or otherwise promote the purchase of a policy for the purpose of <br/>
<a id="pl.6.15"></a><var>6.15</var>or with an emphasis on the subsequent sale of the policy in the secondary market; <br/>
<a id="pl.6.16"></a><var>6.16</var>(4) enter into a premium finance agreement with any person or agency, or any <br/>
<a id="pl.6.17"></a><var>6.17</var>person affiliated with such person or agency, pursuant to which the lender or any person <br/>
<a id="pl.6.18"></a><var>6.18</var>affiliated with the lender shall receive any proceeds, fees, or other consideration, directly <br/>
<a id="pl.6.19"></a><var>6.19</var>or indirectly, from the policy or policyowner or any other person with respect to the <br/>
<a id="pl.6.20"></a><var>6.20</var>premium finance agreement or any settlement contract or other transaction related to <br/>
<a id="pl.6.21"></a><var>6.21</var>such policy that are in addition to the amounts required to pay the principal, interest, and <br/>
<a id="pl.6.22"></a><var>6.22</var>service charges related to policy premiums pursuant to the premium finance agreement or <br/>
<a id="pl.6.23"></a><var>6.23</var>subsequent sale of such agreement; provided, further, that any payments, charges, fees, <br/>
<a id="pl.6.24"></a><var>6.24</var>or other amounts in addition to the amounts required to pay the principal, interest, and <br/>
<a id="pl.6.25"></a><var>6.25</var>service charges related to policy premiums paid under the premium finance agreement <br/>
<a id="pl.6.26"></a><var>6.26</var>shall be remitted to the insured or to the insured's estate if the insured is not living at the <br/>
<a id="pl.6.27"></a><var>6.27</var>time of the determination of the overpayment; or<br/>
<a id="pl.6.28"></a><var>6.28</var>(5) enter into or to offer to enter into a settlement contract prior to the issuance of a <br/>
<a id="pl.6.29"></a><var>6.29</var>policy that is the subject of the settlement contract or proposed settlement contract.<br/>
<br/>
<a id="bill.0.5.0"></a><a id="pl.6.30"></a><var>6.30</var>    Sec. 5. <b>[60A.0785] PROHIBITION; ENTRY INTO SETTLEMENT </b><br/>
<a id="pl.6.31"></a><var>6.31</var><b>CONTRACTS.</b><br/>
<a id="pl.6.32"></a><var>6.32</var>    Subdivision 1. <b>Prohibition.</b> No prospective purchaser of the policy or beneficial <br/>
<a id="pl.6.33"></a><var>6.33</var>interest in the policy shall, at any time prior to issuance of a policy, or during a four-year <br/>
<a id="pl.6.34"></a><var>6.34</var>period commencing with the date of issuance of the policy, enter into a settlement contract <br/>
<a id="pl.7.1"></a><var>7.1</var>regardless of the date the compensation is to be provided and regardless of the date the <br/>
<a id="pl.7.2"></a><var>7.2</var>assignment, transfer, sale, devise, bequest, or surrender of the policy is to occur, unless <br/>
<a id="pl.7.3"></a><var>7.3</var>and until the prospective policy purchaser has determined, based on reasonable inquiry, <br/>
<a id="pl.7.4"></a><var>7.4</var>which includes but is not limited to questioning the insured and reviewing the broker's <br/>
<a id="pl.7.5"></a><var>7.5</var>files, that none of the following circumstances are present:<br/>
<a id="pl.7.6"></a><var>7.6</var>    (1) there was an agreement or understanding, before issuance of the policy, between <br/>
<a id="pl.7.7"></a><var>7.7</var>the insured, policyowner, or owner of a beneficial interest in the policy, and another person <br/>
<a id="pl.7.8"></a><var>7.8</var>to guarantee any liability or to purchase, or stand ready to purchase, the policy or an <br/>
<a id="pl.7.9"></a><var>7.9</var>interest therein, including through an assumption or forgiveness of a loan; or<br/>
<a id="pl.7.10"></a><var>7.10</var>    (2) both of the following are present:<br/>
<a id="pl.7.11"></a><var>7.11</var>    (i) all or a portion of the policy premiums were funded by means other than by the <br/>
<a id="pl.7.12"></a><var>7.12</var>insured's personal assets or assets provided by a person who is closely related to the <br/>
<a id="pl.7.13"></a><var>7.13</var>insured by blood or law or who has a lawful and substantial economic interest in the <br/>
<a id="pl.7.14"></a><var>7.14</var>continued life of the insured.  For purposes of this provision, funds from a premium finance <br/>
<a id="pl.7.15"></a><var>7.15</var>loan are considered assets of the insured or such person only if the insured or such person <br/>
<a id="pl.7.16"></a><var>7.16</var>is contractually obligated to repay the full amount of the loan and to pledge personal <br/>
<a id="pl.7.17"></a><var>7.17</var>assets, other than the policy itself, for loan amounts exceeding the policy's cash value; and<br/>
<a id="pl.7.18"></a><var>7.18</var>    (ii) the insured underwent a life expectancy evaluation within the eighteen-month <br/>
<a id="pl.7.19"></a><var>7.19</var>time period immediately prior to the issuance of the policy and, during the same time <br/>
<a id="pl.7.20"></a><var>7.20</var>period, the results of the life expectancy evaluation were shared with or used by any <br/>
<a id="pl.7.21"></a><var>7.21</var>person for the purpose of determining the actual or potential value of the policy in <br/>
<a id="pl.7.22"></a><var>7.22</var>the secondary market. Nothing in this paragraph shall prevent such a life expectancy <br/>
<a id="pl.7.23"></a><var>7.23</var>evaluation from being shared with or used by the insured or the insured's accountant, <br/>
<a id="pl.7.24"></a><var>7.24</var>attorney, or insurance producer for estate planning purposes so long as the life expectancy <br/>
<a id="pl.7.25"></a><var>7.25</var>evaluation is not used by such persons to determine the actual or potential value of the <br/>
<a id="pl.7.26"></a><var>7.26</var>policy in the secondary market.<br/>
<a id="pl.7.27"></a><var>7.27</var>    Subd. 2. <b>Legitimate insurance transactions.</b> Nothing in this act prevents:<br/>
<a id="pl.7.28"></a><var>7.28</var>    (1) any policyowner, whether or not the policyowner is also the subject of the <br/>
<a id="pl.7.29"></a><var>7.29</var>insurance, from entering into a legitimate settlement contract;<br/>
<a id="pl.7.30"></a><var>7.30</var>    (2) any person from soliciting a person to enter into a legitimate settlement contract;<br/>
<a id="pl.7.31"></a><var>7.31</var>    (3) a person from enforcing the payment of proceeds from the interest obtained <br/>
<a id="pl.7.32"></a><var>7.32</var>under a legitimate settlement contract; or<br/>
<a id="pl.7.33"></a><var>7.33</var>    (4) the assignment, sale, transfer, devise, or bequest with respect to the death benefit <br/>
<a id="pl.7.34"></a><var>7.34</var>or ownership of any portion of a policy, provided the assignment, sale, transfer, devise, or <br/>
<a id="pl.7.35"></a><var>7.35</var>bequest is connected to a legitimate settlement contract and not part of or in furtherance <br/>
<a id="pl.7.36"></a><var>7.36</var>of STOLI practices.<br/>
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<a id="bill.0.6.0"></a><a id="pl.8.1"></a><var>8.1</var>    Sec. 6. <b>[60A.0787] PROCESSING CHANGE OF OWNERSHIP OR </b><br/>
<a id="pl.8.2"></a><var>8.2</var><b>BENEFICIARY REQUESTS.</b><br/>
<a id="pl.8.3"></a><var>8.3</var>    Subdivision 1. <b>Obligation to process change of ownership or beneficiary </b><br/>
<a id="pl.8.4"></a><var>8.4</var><b>requests.</b> Upon receipt of a properly completed request for change of ownership or <br/>
<a id="pl.8.5"></a><var>8.5</var>beneficiary of a policy and, if applicable, the completed questionnaire described in <br/>
<a id="pl.8.6"></a><var>8.6</var>this section, the insurer shall respond in writing within 30 calendar days with written <br/>
<a id="pl.8.7"></a><var>8.7</var>acknowledgment confirming that the change has been effected or specifying the reasons <br/>
<a id="pl.8.8"></a><var>8.8</var>why the requested change cannot be processed. The insurer shall not unreasonably delay <br/>
<a id="pl.8.9"></a><var>8.9</var>effecting change of ownership or beneficiary and shall not otherwise interfere with any <br/>
<a id="pl.8.10"></a><var>8.10</var>permitted settlement contract entered into in this state.<br/>
<a id="pl.8.11"></a><var>8.11</var>    Subd. 2. <b>Written questionnaire.</b> If the insurer receives a request for change <br/>
<a id="pl.8.12"></a><var>8.12</var>of ownership or beneficiary within the four-year period commencing with the date the <br/>
<a id="pl.8.13"></a><var>8.13</var>policy is issued, the insurer may require, as a condition of effecting the requested change, <br/>
<a id="pl.8.14"></a><var>8.14</var>that the policyowner complete and return a written questionnaire designed to determine <br/>
<a id="pl.8.15"></a><var>8.15</var>whether the change request relates to or is made in accordance with a settlement contract <br/>
<a id="pl.8.16"></a><var>8.16</var>and if so, whether the circumstances described in section 60A.0785 are present. The <br/>
<a id="pl.8.17"></a><var>8.17</var>questionnaire shall be in a form approved by the commissioner and shall include, but <br/>
<a id="pl.8.18"></a><var>8.18</var>not be limited to, the following:<br/>
<a id="pl.8.19"></a><var>8.19</var>(1) the definition of settlement contract;<br/>
<a id="pl.8.20"></a><var>8.20</var>(2) an inquiry regarding whether the request for change of ownership or beneficiary <br/>
<a id="pl.8.21"></a><var>8.21</var>relates to or is made in accordance with a settlement contract;<br/>
<a id="pl.8.22"></a><var>8.22</var>(3) if the answer to clause (2) is "yes," then an inquiry regarding whether the <br/>
<a id="pl.8.23"></a><var>8.23</var>circumstances described in section 60A.0785 are present; <br/>
<a id="pl.8.24"></a><var>8.24</var>(4) a disclosure that presenting false material information, or concealing material <br/>
<a id="pl.8.25"></a><var>8.25</var>information, in connection with the questionnaire is defined under the laws of this state <br/>
<a id="pl.8.26"></a><var>8.26</var>as a fraudulent act; and<br/>
<a id="pl.8.27"></a><var>8.27</var>(5) a signed certification by the policyowner that the answers and information <br/>
<a id="pl.8.28"></a><var>8.28</var>provided in and pursuant to the questionnaire are true and complete to the best of the <br/>
<a id="pl.8.29"></a><var>8.29</var>policyowner's knowledge and belief.<br/>
<a id="pl.8.30"></a><var>8.30</var>    Subd. 3. <b>Other inquiries.</b> Nothing in this section should be interpreted to limit an <br/>
<a id="pl.8.31"></a><var>8.31</var>insurer's ability to make other inquiries to detect STOLI practices.<br/>
<a id="pl.8.32"></a><var>8.32</var>    Subd. 4. <b>Fraternal benefit societies.</b> Nothing in this act shall prohibit a fraternal <br/>
<a id="pl.8.33"></a><var>8.33</var>benefit society regulated under chapter 64B from enforcing the terms of its bylaws or rules <br/>
<a id="pl.8.34"></a><var>8.34</var>regarding permitted beneficiaries and owners.<br/>
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<a id="bill.0.7.0"></a><a id="pl.8.35"></a><var>8.35</var>    Sec. 7. <b>[60A.0788] FRAUDULENT ACTS.</b><br/>
<a id="pl.9.1"></a><var>9.1</var>    Subdivision 1. <b>Fraudulent acts.</b>  A person who commits a fraudulent act as defined <br/>
<a id="pl.9.2"></a><var>9.2</var>in this section commits insurance fraud and may be sentenced under section 609.611, <br/>
<a id="pl.9.3"></a><var>9.3</var>subdivision 3.<br/>
<a id="pl.9.4"></a><var>9.4</var>    Subd. 2. <b>List of fraudulent acts.</b> All of the following acts are fraudulent when <br/>
<a id="pl.9.5"></a><var>9.5</var>committed by a person who, with intent to defraud and for the purpose of depriving <br/>
<a id="pl.9.6"></a><var>9.6</var>another of property or for pecuniary gain, commits, or permits any of its employees or its <br/>
<a id="pl.9.7"></a><var>9.7</var>agents to commit them:<br/>
<a id="pl.9.8"></a><var>9.8</var>(1) failing to disclose to the insurer where the insurer has requested such disclosure <br/>
<a id="pl.9.9"></a><var>9.9</var>that the prospective insured has undergone a life expectancy evaluation;<br/>
<a id="pl.9.10"></a><var>9.10</var>(2) misrepresenting a person's state of residence or facilitating the change of the state <br/>
<a id="pl.9.11"></a><var>9.11</var>in which a person resides for the express purpose of evading or avoiding the provisions <br/>
<a id="pl.9.12"></a><var>9.12</var>of this act; and<br/>
<a id="pl.9.13"></a><var>9.13</var>(3) presenting, causing to be presented, or preparing with knowledge or belief that it <br/>
<a id="pl.9.14"></a><var>9.14</var>will be presented to an insurer any false material information, or concealing any material <br/>
<a id="pl.9.15"></a><var>9.15</var>information, as part of, in support of, or concerning a fact material to one or more of <br/>
<a id="pl.9.16"></a><var>9.16</var>the following:<br/>
<a id="pl.9.17"></a><var>9.17</var>(i) a questionnaire as provided for under section 60A.0787; or<br/>
<a id="pl.9.18"></a><var>9.18</var>(ii) any other documents or communications, whether written or verbal, which are <br/>
<a id="pl.9.19"></a><var>9.19</var>intended to detect STOLI practices or demonstrate compliance with this act.<br/>
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<a id="bill.0.8.0"></a><a id="pl.9.20"></a><var>9.20</var>    Sec. 8. <b>[60A.0789] REMEDIES.</b><br/>
<a id="pl.9.21"></a><var>9.21</var>    Subdivision 1. <b>Actions to recover death benefits.</b> (a) If the beneficiary, assignee, or <br/>
<a id="pl.9.22"></a><var>9.22</var>other payee receives the death benefits under a life insurance policy initiated by STOLI <br/>
<a id="pl.9.23"></a><var>9.23</var>practices or a policy procured or effected in violation of section 60A.0783 or section <br/>
<a id="pl.9.24"></a><var>9.24</var>60A.0785, the personal representative of the insured's estate or other lawfully acting agent <br/>
<a id="pl.9.25"></a><var>9.25</var>may maintain an action to recover such benefits from the person receiving them.<br/>
<a id="pl.9.26"></a><var>9.26</var>(b) Where a person receives the death benefit as a result of a nonwillful violation of <br/>
<a id="pl.9.27"></a><var>9.27</var>this act, the court may limit the recovery to unjust enrichment, calculated as the benefits <br/>
<a id="pl.9.28"></a><var>9.28</var>received plus interest from the date of receipt, less premiums paid under the policy by <br/>
<a id="pl.9.29"></a><var>9.29</var>the recipient and any consideration paid by the recipient to the insured in connection <br/>
<a id="pl.9.30"></a><var>9.30</var>with the policy.<br/>
<a id="pl.9.31"></a><var>9.31</var>(c) Where a person receives the death benefits as the result of a willful violation of <br/>
<a id="pl.9.32"></a><var>9.32</var>this act, the court may, in addition to actual damages, order the defendant or defendants to <br/>
<a id="pl.9.33"></a><var>9.33</var>pay exemplary damages in an amount up to two times the death benefits. A pattern of <br/>
<a id="pl.9.34"></a><var>9.34</var>violations of this act and conduct involving one or more fraudulent acts are evidence of <br/>
<a id="pl.10.1"></a><var>10.1</var>willfulness. The exemplary damages shall be paid to one or more governmental agencies <br/>
<a id="pl.10.2"></a><var>10.2</var>charged with combating consumer fraud, including the Department of Commerce.<br/>
<a id="pl.10.3"></a><var>10.3</var>(d) The court may award reasonable attorney fees, together with costs and <br/>
<a id="pl.10.4"></a><var>10.4</var>disbursements, to any party that recovers damages in any action brought under this <br/>
<a id="pl.10.5"></a><var>10.5</var>subdivision.<br/>
<a id="pl.10.6"></a><var>10.6</var>    Subd. 2. <b>Enforceability of contracts.</b> Any contract, agreement, arrangement, or <br/>
<a id="pl.10.7"></a><var>10.7</var>transaction prohibited under this act is voidable.<br/>
<a id="pl.10.8"></a><var>10.8</var>    Subd. 3. <b>Effect on other law.</b> This act shall not:<br/>
<a id="pl.10.9"></a><var>10.9</var>(1) preempt or limit other civil remedies, including, but not limited to, declaratory <br/>
<a id="pl.10.10"></a><var>10.10</var>judgments, injunctive relief, and interpleaders;<br/>
<a id="pl.10.11"></a><var>10.11</var>(2) preempt the authority or relieve the duty of other law enforcement or regulatory <br/>
<a id="pl.10.12"></a><var>10.12</var>agencies to investigate, examine, and prosecute suspected violations of law; <br/>
<a id="pl.10.13"></a><var>10.13</var>(3) limit the powers granted elsewhere by the laws of this state to the commissioner <br/>
<a id="pl.10.14"></a><var>10.14</var>or an insurance fraud unit or the attorney general to investigate and examine possible <br/>
<a id="pl.10.15"></a><var>10.15</var>violations of law and to take appropriate actions against wrongdoers; or<br/>
<a id="pl.10.16"></a><var>10.16</var>(4) limit the power of this state to punish a person for conduct that constitutes a <br/>
<a id="pl.10.17"></a><var>10.17</var>crime under other laws of this state.<br/>
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<a id="bill.0.9.0"></a><a id="pl.10.18"></a><var>10.18</var>    Sec. 9. <b> REPEALER.</b><br/>
<a id="pl.10.19"></a><var>10.19</var>Minnesota Statutes 2008, sections 61A.073; and 61A.074, are repealed.<br/>
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<a id="bill.0.10.0"></a><a id="pl.10.20"></a><var>10.20</var>    Sec. 10. <b>EFFECTIVE DATE.</b><br/>
<a id="pl.10.21"></a><var>10.21</var>This act is effective for policies issued on or after August 1, 2009.<br/>