An agent helps a terminally ill policyowner sell an existing life insurance policy to an investor for more than its cash surrender value. To perform this transaction lawfully in California, the agent must:

Why B is correct

Arranging a life settlement generally requires broker licensing under CIC §§10113.1-10113.3, but CIC §10113.2(b)(1)(D)(i) deems a life insurance producer who has held a life agent license for at least one year to meet the broker licensing requirements. The producer must notify the Commissioner within 10 days of operating as a broker and pay an $85 fee. Accordingly, an appropriately licensed life agent may lawfully perform this transaction without obtaining a separate life settlement broker license.

Why the other options are wrong

• A) A separate life settlement broker license is not required for a life agent licensed at least one year; CIC §10113.2(b)(1)(D)(i) deems such producers to meet the broker licensing requirements, with only a 10-day notice and $85 fee.
• C) A life settlement broker is entitled to compensation for arranging the transaction; the law requires licensing and disclosures, not a prohibition on compensation.
• D) Approval from the investor's bank is not a requirement of California insurance law; the transaction is governed by CIC §§10113.1-10113.3 and the required disclosures.

Memory hook

Selling a used policy needs its own ticket. Life settlement brokering requires the life settlement broker license.