State RegulationsNY specificDifficulty 3/5
A policyowner in Rochester wants to sell her life insurance policy in a life settlement. The policy was issued less than 2 years ago, but the insured has been diagnosed with a terminal illness. Under N.Y. Ins. Law §7813, the settlement is:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §7813(j)(1), no life settlement is permitted within 2 years after the policy is issued. The moratorium, however, contains express exceptions, including where the insured is terminally ill or chronically ill. Because the insured here is terminally ill, the settlement may proceed even though the policy was issued less than 2 years ago.
Why the other options are wrong
- A) The 2-year moratorium is not absolute; terminal illness is one of the statute's enumerated exceptions, so the settlement is not barred.
- C) A Superintendent determination is an extraordinary, case-specific exception and is not a required precondition for every settlement during the moratorium period.
- D) The insurer's consent is not the mechanism; the statute itself excuses the terminal-illness case from the moratorium.
Memory hook
The 2-year settlement moratorium yields to terminal or chronic illness.