State RegulationsNY specificDifficulty 1/5
Which transaction is a life settlement contract as defined in N.Y. Ins. Law §7802?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under N.Y. Ins. Law §7802, a life settlement contract is the written agreement under which the owner of an existing life insurance policy sells or transfers the policy to a life settlement provider for compensation. The defining elements are an existing policy, an owner transferring it, and compensation paid by the purchasing provider.
Why the other options are wrong
- B) A life settlement involves an existing policy, not the purchase of new coverage with a third-party beneficiary.
- C) Borrowing against cash value is a policy loan under the policy's own terms, not a transfer of ownership for compensation.
- D) A collateral assignment secures a debt while the owner keeps the policy, so it is not a life settlement.
Memory hook
Life settlement means sell the old policy — not borrow, assign, or buy new.