6. The bill eliminates the minimum payment requirement for life settlements.
7. The bill requires that, before entering into a life settlement contract, the
provider must obtain from the owner's physician, if the owner is the insured under
the policy to be settled, a statement that the owner is under no constraint or undue
influence to enter into a life settlement contract. Within 20 days of an owner's
agreement to settle a policy, the provider must give written notice to the insurer that
issued the policy that the policy will be the subject of a life settlement. The provider
must also deliver to the insurer that issued the policy a copy of the insured's medical
release, the owner's application for the life settlement, and a request for verification
of coverage. The insurer must respond to a request for verification of coverage within
30 days after receiving the request and must indicate whether the insurer intends
to investigate the validity of the contract or fraud related to the contract.
8. The bill retains the owner's ability to rescind a life settlement contract within
the same time as under current law and provides that, if the insured dies during the
period in which the owner may rescind a contract, the contract is automatically
rescinded subject to repayment by the owner or owner's estate of all proceeds and
payments made by the provider or a purchaser.
9. Under the bill, the owner, at the direction of the provider, must send the
documents required to change the ownership of the policy directly to the escrow
agent. Within three business days of the escrow agent receiving the documents, the
provider must pay the proceeds of the life settlement to the escrow agent. If the

escrow agent does not pay the proceeds to the owner within three days after receiving
acknowledgement that the ownership of the policy was transferred, the owner may
void the life settlement contract until the proceeds are tendered to and accepted by
the owner.
10. Within 30 days of receiving a request for a change of ownership or
beneficiary of a policy, the insurer that issued a policy that is the subject of a life
settlement must either acknowledge that the requested change has been made or
specify the reasons why the requested change cannot be made.
11. Under the bill, a broker represents only the owner of the policy that will be
the subject of a life settlement and owes a fiduciary duty to the owner.
12. The bill prohibits fraudulent life settlement acts, including acts or
omissions that are committed by any person for the purpose of pecuniary gain; any
acts that a person does in the furtherance of a fraud or to prevent the detection of a
fraud; embezzlement, theft, misappropriation, or conversion from a life settlement
provider, insurer, insured, owner, or any person engaged in the business of life
settlements or insurance; recklessly dealing in a life settlement the subject of which
is a policy that was obtained with intent to defraud; attempting, assisting, or
conspiring to commit a fraudulent life settlement act; and stranger-originated life
insurance. Stranger-originated life insurance is the initiation of a life insurance
policy for the benefit of a third-party investor who has no insurable interest in the
insured. The bill prohibits various other activities in connection with life
settlements, including engaging in a transaction if the person knows that the intent
is to avoid notice requirements; issuing or promoting the purchase of a life insurance
policy for the purpose of settling the policy under a life settlement; and making a
representation to the policy owner in connection with the sale or financing of a policy
that the insurance is free unless that is provided in the policy. The bill requires a
statement in all life settlement contracts, purchase agreements, and applications for
a life settlement that any person who knowingly presents false information in an
application for insurance, a life settlement, or a purchase agreement may be subject
to civil and criminal penalties. The bill requires a person who engages in the
business of life settlements and has knowledge or a reasonable belief that certain
violations related to life settlements have been or will be committed to report that
to the commissioner. Providers and brokers must have in place antifraud initiatives
described in the bill.
13. Relating to advertisement of life settlements, the bill requires providers
and brokers to maintain a system of control over the advertising of life settlements;
requires that disclosures not be minimized or obscured; prohibits the omission of
information or using misleading information about a benefit, covered loss, premium
payable, or tax consequences; prohibits the use of the name or title of a life insurance
company or policy unless the insurer has approved the advertisement; prohibits use
of testimonials, appraisals, or analyses unless they are genuine; prohibits the
implication that a life settlement contract or purchase agreement has been endorsed
by an organization unless that is the fact; prohibits inaccurate statistical
information; prohibits the disparagement of insurers, providers, brokers, producers,
policies, services, or methods of marketing; requires the name of the provider or

broker to be in all advertisements; prohibits the use of materials that mislead policy
owners or prospective purchasers into believing that the advertisement is connected
with a government program or agency; prohibits exaggeration of the fact that the
provider or broker holds a license so as to suggest that competing licensees are not
licensed; prohibits emphasizing the dollar amounts available to an owner except as
an average purchase price as a percent of the face value obtained by other policy
owners in life settlements with the licensee during the previous six months; and
imposes other requirements. The commissioner may require a provider or broker to
submit advertising materials.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB513, s. 1 1Section 1. 49.857 (1) (d) 20. of the statutes is amended to read:
SB513,6,32 49.857 (1) (d) 20. A license issued under s. 628.04, 632.68 (2) or (4) 632.69 (2),
3or 633.14 or a temporary license issued under s. 628.09.
SB513, s. 2 4Section 2. 71.05 (1) (f) of the statutes is amended to read:
SB513,6,115 71.05 (1) (f) Income from the sales of certain insurance policies. Income received
6by the original policyholder or original certificate holder who has a catastrophic or
7life-threatening illness or condition
from the sale of a life insurance policy or
8certificate, or the sale of the death benefit under a life insurance policy or certificate,
9under a viatical life settlement contract, as defined in s. 632.68 (1) (d) 632.69 (1) (k).
10In this paragraph, "catastrophic or life-threatening illness or condition" includes
11AIDS, as defined in s. 49.686 (1) (a), and HIV infection, as defined in s. 49.686 (1) (d)
.
SB513, s. 3 12Section 3. 71.26 (3) (ag) of the statutes is amended to read:
SB513,7,413 71.26 (3) (ag) Section 61 (relating to the definition of gross income) is modified
14to exclude income received by the original policyholder or original certificate holder
15who has a catastrophic or life-threatening illness or condition from the sale of a life
16insurance policy or certificate, or the sale of the death benefit under a life insurance

1policy or certificate, under a viatical life settlement contract, as defined in s. 632.68
2(1) (d)
632.69 (1) (k). In this paragraph, "catastrophic or life-threatening illness or
3condition" includes AIDS, as defined in s. 49.686 (1) (a), and HIV infection, as defined
4in s. 49.686 (1) (d)
.
SB513, s. 4 5Section 4. 71.45 (2) (a) 14. of the statutes is amended to read:
SB513,7,136 71.45 (2) (a) 14. By subtracting from federal taxable income the amount that
7is included in that income from the sale by the original policyholder or original
8certificate holder who has a catastrophic or life-threatening illness or condition of
9a life insurance policy or certificate, or the sale of the death benefit under a life
10insurance policy or certificate, under a viatical life settlement contract, as defined
11in s. 632.68 (1) (d) 632.69 (1) (k). In this subdivision, "catastrophic or
12life-threatening illness or condition" includes AIDS, as defined in s. 49.686 (1) (a),
13and HIV infection, as defined in s. 49.686 (1) (d)
.
SB513, s. 5 14Section 5. 73.0301 (1) (d) 12. of the statutes is amended to read:
SB513,7,1615 73.0301 (1) (d) 12. A license issued under s. 628.04, 632.68 (2) or (4) 632.69 (2),
16or 633.14 or a temporary license issued under s. 628.09.
SB513, s. 6 17Section 6. 321.60 (1) (a) 20. of the statutes is amended to read:
SB513,7,1918 321.60 (1) (a) 20. A license issued under s. 628.04, 632.68 (2) or (4) 632.69 (2),
19or 633.14 or a temporary license issued under s. 628.09.
SB513, s. 7 20Section 7. 551.102 (17) (d) of the statutes is amended to read:
SB513,7,2321 551.102 (17) (d) With respect to a fractional or pool interest in a viatical life
22settlement investment, "issuer" means every person who creates the fractional or
23pool interest for the purpose of offering or selling the interest.
SB513, s. 8 24Section 8. 551.102 (17) (e) of the statutes is amended to read:
SB513,8,8
1551.102 (17) (e) With respect to a viatical life settlement investment that is not
2a fractional or pool interest, "issuer" means the viatical settlement provider, as
3defined in s. 632.68 (1) (e) 632.69 (1) (p), or the person who purchases or otherwise
4acquires the viatical life settlement from a viatical settlement provider and then
5offers or sells viatical life settlement investments therein except that, under this
6paragraph, "issuer" does not include a broker-dealer or agent registered under this
7chapter and does not include the viator owner of the insurance policy, certificate of
8insurance, or death benefit underlying the viatical life settlement investment.
SB513, s. 9 9Section 9. 551.102 (28) (intro.) of the statutes is amended to read:
SB513,8,2210 551.102 (28) (intro.) "Security" means a note; stock; treasury stock; security
11future; bond; debenture; evidence of indebtedness; limited partnership interest;
12viatical life settlement investment or similar agreement; certificate of interest or
13participation in a profit-sharing agreement; collateral trust certificate;
14preorganization certificate or subscription; transferable share; investment contract;
15voting trust certificate; certificate of deposit for a security; fractional undivided
16interest in oil, gas, or other mineral rights; put, call, straddle, option, or privilege on
17a security, certificate of deposit, or group or index of securities, including an interest
18therein or based on the value thereof; put, call, straddle, option, or privilege entered
19into on a national securities exchange relating to foreign currency; or, in general, an
20interest or instrument commonly known as a "security"; or a certificate of interest
21or participation in, temporary or interim certificate for, receipt for, guarantee of, or
22warrant or right to subscribe to or purchase, any of the foregoing. The term:
SB513, s. 10 23Section 10. 551.102 (32) of the statutes is renumbered 551.102 (17m), and
24551.102 (17m) (intro.) and (a), as renumbered, are amended to read:
SB513,9,5
1551.102 (17m) (intro.) "Viatical Life settlement investment" means the entire
2interest or any fractional or pool interest in a life insurance policy or certificate of
3insurance or in the death benefit thereunder that is the subject of a viatical life
4settlement, as defined in s. 632.68 (1) (b) 632.69 (1) (j), but does not include any of
5the following:
SB513,9,86 (a) The assignment, transfer, sale, devise or bequest of a death benefit, life
7insurance policy, or certificate of insurance by the viator owner to a viatical
8settlement
provider pursuant to s. 632.68 632.69.
SB513, s. 11 9Section 11. 601.31 (1) (mm) of the statutes is amended to read:
SB513,9,1110 601.31 (1) (mm) For initial issuance of a license as a viatical settlement
11provider under s. 632.68 (2) 632.69 (2) (b), $750.
SB513, s. 12 12Section 12. 601.31 (1) (mp) of the statutes is amended to read:
SB513,9,1413 601.31 (1) (mp) For each annual renewal of a license as a viatical settlement
14provider under s. 632.68 (2) 632.69 (2) (j), $250.
SB513, s. 13 15Section 13. 601.31 (1) (mr) of the statutes is amended to read:
SB513,9,1716 601.31 (1) (mr) For initial issuance of a license as a viatical settlement broker
17under s. 632.68 (4) 632.69 (2) (b), $750.
SB513, s. 14 18Section 14. 601.31 (1) (ms) of the statutes is amended to read:
SB513,9,2019 601.31 (1) (ms) For each annual renewal of a license as a viatical settlement
20broker under s. 632.68 (4) 632.69 (2) (j), $250.
SB513, s. 15 21Section 15. 632.68 of the statutes is repealed.
SB513, s. 16 22Section 16. 632.69 of the statutes is created to read:
SB513,9,23 23632.69 Life settlements. (1) Definitions. In this section:
SB513,9,2524 (a) "Advertisement" means any written, electronic, or printed communication
25or any communication made by means of recorded telephone messages or

1transmitted on radio, television, the Internet, or similar communications media,
2including film strips, motion pictures, and videos, published, disseminated,
3circulated, or placed, directly or indirectly, before the public in this state for the
4purpose of creating an interest in or inducing a person to purchase or sell, assign,
5devise, bequeath, or transfer the death benefit or ownership of a policy or an interest
6in a policy pursuant to a life settlement contract.
SB513,10,127 (b) "Broker" means a person who, on behalf of an owner and for a fee,
8commission, or other valuable consideration, offers or attempts to negotiate life
9settlement contracts between an owner and one or more providers, or one or more
10brokers. "Broker" does not include an attorney or certified public accountant who is
11retained to represent the owner and whose compensation is not paid directly or
12indirectly by the provider or purchaser.
SB513,10,1713 (c) "Business of life settlements" means an activity involved in the offering
14soliciting, negotiating, procuring, effectuating, purchasing, investing in, financing,
15monitoring, tracking, underwriting, selling, transferring, assigning, pledging,
16hypothicating, or in any other manner, acquiring an interest in a policy by means of
17a life settlement contract.
SB513,10,1818 (d) "Chronically ill" means any of the following:
SB513,10,2019 1. Being unable to perform at least 2 activities of daily living, including eating,
20toileting, transferring, bathing, dressing, or continence.
SB513,10,2221 2. Requiring substantial supervision to monitor the health and safety of the
22individual due to his or her severe cognitive impairment.
SB513,10,2423 3. Having a level of disability similar to that described in subd. 1., as defined
24by the U.S. department of health and human services.
SB513,11,9
1(e) "Financing entity" means a person whose principal activity related to a life
2settlement is providing funds to effect the life settlement contract or purchase of one
3or more policies and who has an agreement in writing with one or more providers to
4finance the acquisition of life settlement contracts, including an underwriter,
5placement agent, lender, purchaser of securities, purchaser of a policy from a life
6settlement provider, credit enhancer, or any entity that has a direct ownership in a
7policy that is the subject of a life settlement contract. "Financing entity" does not
8include an investor that is not an accredited investor, as defined in 17 CFR 230.501
9(a), or a purchaser.
SB513,11,1310 (f) "Financing transaction" means a transaction in which a licensed provider
11obtains financing from a financing entity including any secured or unsecured
12financing, any securitization transaction, or any securities offering which is either
13registered or exempt from registration under federal and state securities law.
SB513,11,1414 (g) "Fraudulent life settlement act" includes all of the following:
SB513,11,1715 1. Acts or omissions that are committed by any person, or that a person permits
16its employees or its agents to engage in, for the purpose of pecuniary gain, including
17any of the following:
SB513,12,418 a. Presenting, causing to be presented, or preparing with the knowledge or
19belief that it will be presented to or by a provider, broker, purchaser, financing entity,
20insurer, insurance producer, or any other person, false material information, or
21concealing material information, as part of, in support of, or concerning a fact
22material to an application for the issuance of a life settlement contract or a policy;
23the underwriting of a life settlement contract or a policy; a claim for payment or
24benefit under a life settlement contract or a policy; premiums paid on an insurance
25policy; payments and changes in ownership or beneficiary made in accordance with

1the terms of a life settlement contract or a policy; the reinstatement or conversion of
2a policy; the solicitation, offer, effectuation, or sale of a life settlement contract or a
3policy; the issuance of written evidence of a life settlement contract or a policy; or a
4financing transaction.
SB513,12,65 b. Employing any plan, device, scheme, or artifice to defraud in the business
6of life settlements.
SB513,12,107 c. Failing to disclose to an insurer, if the request for such disclosure has been
8made by the insurer, that the prospective owner has undergone a life expectancy
9evaluation by any person or entity other than the insurer or its authorized
10representatives in connection with the issuance of the policy.
SB513,12,1211 2. Any of the following acts that any person does, or permits its employees or
12agents to do, in the furtherance of a fraud or to prevent the detection of a fraud:
SB513,12,1513 a. Removing, concealing, altering, destroying, or sequestering from the
14commissioner the assets or records of a licensee or other person engaged in the
15business of life settlements.
SB513,12,1716 b. Misrepresenting or concealing the financial condition of a licensee, financing
17entity, insurer, or other person.
SB513,12,2018 c. Transacting the business of life settlements in violation of laws requiring a
19license, certificate of authority, or other legal authority for the transaction of the
20business of life settlements.
SB513,12,2321 d. Filing with the commissioner or the chief insurance regulatory official of
22another jurisdiction a document containing false information or otherwise
23concealing information about a material fact from the commissioner or official.
SB513,13,3
13. Embezzlement, theft, misappropriation, or conversion of monies, funds,
2premiums, credits, or other property of a life settlement provider, insurer, insured,
3owner, or any other person engaged in the business of life settlements or insurance.
SB513,13,94 4. Recklessly entering into, negotiating, brokering, or otherwise dealing in a
5life settlement contract, the subject of which is a life insurance policy that was
6obtained by presenting false information concerning any fact material to the policy
7or by concealing for the purpose of misleading another information concerning any
8fact material to the policy, where the person or persons intended to defraud the
9policy's issuer, the provider, or the owner.
SB513,13,1110 5. Attempting to commit; assisting, aiding, or abetting in the commission of;
11or conspiring to commit the acts or omissions specified in this paragraph.
SB513,13,1412 6. Misrepresenting the state of residence of an owner to be a state that does not
13have a law substantially similar to this section for the purpose of evading or avoiding
14the provisions of this section.
SB513,13,1515 7. STOLI.
SB513,13,1616 (h) "Licensee" means a provider or broker that holds a license under sub. (2).
SB513,13,1917 (i) "Life expectancy" means the arithmetic mean, considering medical records
18and appropriate experiential data, of the number of months an insured under the
19policy to be settled can be expected to live.
SB513,14,220 (j) 1. "Life settlement" means an agreement regarding the terms under which
21compensation or any thing of value will be paid, which compensation or thing of value
22is less than the expected death benefit of the policy but greater than the cash
23surrender value or accelerated death benefit available under the policy at the time
24of the application for the life settlement, in return for the owner's present or future

1assignment, transfer, sale, devise, or bequest of the death benefit or any interest in
2a policy. "Life settlement" includes all of the following:
SB513,14,63 a. The transfer for compensation or value of ownership or beneficial interest
4in a trust or other entity that owns a policy that insures the life of a person residing
5in this state, if the trust or other entity was formed or availed of for the principal
6purpose of acquiring one or more policies or certificates of insurance.
SB513,14,87 b. A written agreement for a loan or other lending transaction, secured
8primarily by an individual or group policy.
SB513,14,159 c. A premium finance loan made for a policy on, before, or after the date of
10issuance of the policy but only if the loan proceeds are not used solely to pay
11premiums for the policy and any costs or expenses incurred by the lender or the
12borrower in connection with the financing, or if the owner receives on the date of the
13premium finance loan a guarantee of the future life settlement value of the policy,
14or if the owner agrees on the date of the premium finance loan to sell the policy or
15any interest in its death benefit on any date following the issuance of the policy.
SB513,14,1616 2. "Life settlement" does not include any of the following:
SB513,14,1917 a. A policy loan by a life insurance company pursuant to the terms of the policy
18or accelerated death provisions contained in the policy, whether issued with the
19original policy or as a rider.
SB513,14,2420 b. Except as provided in subd. 1. c., a premium finance loan or any loan made
21by a bank or other licensed financial institution, provided that neither default on
22such loan nor the transfer of the policy in connection with such default is pursuant
23to an agreement or understanding with any other person for the purpose of evading
24regulation under this section.
SB513,14,2525 c. A collateral assignment of a policy by an owner.
SB513,15,2
1d. A loan made by a lender that does not violate s. 138.12, if the loan is not
2described in subd. 1. c. and is not otherwise a life settlement contract.
SB513,15,63 e. An agreement where all the parties are closely related to the insured by blood
4or law, or have a lawful substantial economic interest in the continued life, health,
5and bodily safety of the person insured, or are trusts or other entities established
6primarily for the benefit of such parties.
SB513,15,97 f. Any designation, consent, or agreement by an insured who is an employee
8of an employer in connection with the purchase by the employer, or trust established
9by the employer, of life insurance on the life of the employee.
SB513,15,1710 g. A bona fide business succession planning arrangement between one or more
11shareholders in a corporation or between a corporation and one or more of its
12shareholders or one or more trusts established by or for the benefit of its
13shareholders; between one or more partners in a partnership or between a
14partnership and one or more of its partners or one or more trusts established by or
15for the benefit of its partners; or between one or more members in a limited liability
16company or between a limited liability company and one or more of its members or
17one or more trusts established by or for the benefit of its members.
SB513,15,2018 h. An agreement, contract, or transaction that the commissioner excludes by
19rule under sub. (20) (a) after determining that the agreement, contract, or
20transaction is not intended to be regulated by this section.
SB513,15,2221 (k) "Life settlement contract" means a written document providing for and
22establishing the terms of a life settlement.
SB513,16,223 (L) "Owner" means the owner of a policy or a certificate holder under a group
24policy who resides in this state, unless the context requires otherwise, and enters or

1seeks to enter into a life settlement contract. "Owner" does not include any of the
2following:
SB513,16,43 1. A licensee under this section, including a producer acting as a broker under
4this section.
SB513,16,552. A qualified institutional buyer, as defined in 17 CFR 230.144A (a) (1).
SB513,16,66 3. A financing entity.
SB513,16,77 4. A special purpose entity.
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