A New York policy was issued less than two years ago, and the owner wants to settle it now. Under N.Y. Ins. Law §7813(j)(1), which situation allows the settlement despite the moratorium?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under N.Y. Ins. Law §7813(j)(1), a life settlement may not be entered into within two years of policy issue, subject to specific exceptions — among them the insured's terminal illness or chronic illness, the corporate sale of the owner, the death of a spouse, divorce, retirement, disability, bankruptcy, a converted policy that has been paid up for the required period, and an extraordinary determination by the Superintendent of Financial Services. A terminal-illness diagnosis squarely fits the exception, so the owner may proceed without waiting out the moratorium.
Why the other options are wrong
- A) The issuing insurer's consent is not one of the statutory exceptions; only an extraordinary determination by the Superintendent appears in that list.
- B) An owner's desire to stop paying premiums is a motive, not an exception; the moratorium still applies to the settlement.
- C) Rapid cash-value growth does not excuse the two-year moratorium; the statutory exceptions are life-event based, not performance based.
Memory hook
Two-year lock, but hardship unlocks it: terminal or chronic illness, divorce, retirement, disability, bankruptcy.