Under North Carolina law, what must a viatical settlement application or purchase agreement contain?

Why A is correct

Under G.S. 58-58-267, viatical settlement applications and purchase agreements must carry the statutory fraud warning, which tells the applicant that knowingly presenting false information in connection with the transaction is a felony. The warning exists because viatical transactions create strong incentives to misstate health information, and the statute makes the criminal consequence explicit on the face of the paperwork.

Why the other options are wrong

• B) The Buyer's Guide and Policy Summary regime governs the solicitation of life insurance, not viatical settlement paperwork.
• C) The 30-day unconditional refund right belongs to life insurance replacement transactions, not viatical settlements.
• D) The Notice Regarding Replacement applies when one life policy replaces another, which is not inherent in a viatical settlement.

Memory hook

Viatical papers scream felony up front: lie and you lose your freedom.

Why D is correct

Under G.S. 58-58-267, viatical settlement applications and purchase agreements must contain the statutory fraud warning that knowingly presenting false information is a felony. North Carolina has no general fraud-warning statute for ordinary life or health applications, so the warning is specific to viatical transactions.

Why the other options are wrong

• A) No general fraud-warning statute applies to ordinary life applications in North Carolina; the requirement is limited to viatical transactions.
• B) No general fraud-warning statute applies to accident and health applications; the statutory warning is viatical-specific.
• C) Group enrollment forms carry no statutory fraud warning under North Carolina law; the warning applies to viatical documents.

Memory hook

Fraud warning rides only with viaticals.

Why D is correct

Under G.S. 58-58-267, viatical settlement applications and purchase agreements must carry the statutory fraud warning advising that any person who knowingly presents false information in the application is guilty of a felony. North Carolina places this warning requirement specifically on viatical transactions, which involve the sale of a life policy's death benefit and carry a high fraud risk.

Why the other options are wrong

• A is wrong because a noncovered-contract guaranty notice applies only to policies excluded from Association coverage under G.S. 58-62-86(d); it is not the required viatical application disclosure.
• B is wrong because the application does not promise tax-exempt treatment; tax consequences depend on the parties' circumstances and no such statutory statement is required.
• C is wrong because no statute guarantees a minimum settlement price; the viatical disclosure duty concerns the fraud warning, not pricing.

Memory hook

Viatical paperwork carries the felony warning - false information means prison risk.

Why C is correct

Under G.S. 58-58-267, viatical settlement applications and purchase agreements must carry the statutory fraud warning, which states that any person who knowingly presents false information in the transaction is guilty of a felony. The warning is specific to viatical transactions — North Carolina has no general fraud-warning statute for ordinary life and health applications.

Why the other options are wrong

• A) Tax treatment of proceeds is not the statutorily required content.
• B) The Commissioner does not guarantee viatical investments, and no such statement is required.
• D) No death-benefit waiver is part of the required viatical disclosures.

Memory hook

Viatical paperwork carries the felony warning — and only viatical paperwork.