State RegulationsPA specificDifficulty 1/5
Under 40 P.S. § 626.7, what must a viatical settlement disclosure provide to a Pennsylvania consumer who is considering selling a life insurance policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
40 P.S. § 626.7 requires viatical settlement disclosures so that consumers understand what they are giving up. The consumer must be told of alternatives — such as policy loans, accelerated benefits, or surrender — and warned about consequences of a settlement, including the loss of the death benefit and possible tax or public-assistance effects. The disclosure exists because a terminally or chronically ill owner is making an irreversible decision about a valuable asset.
Why the other options are wrong
- B) No disclosure guarantees proceeds above the surrender value; settlements are negotiated transactions, not assured-price buyouts.
- C) The issuing insurer has no obligation to replace a settled policy; the disclosure concerns the consumer's own alternatives and consequences.
- D) Life-expectancy certification is an underwriting input to the provider's offer, not the consumer disclosure that 40 P.S. § 626.7 mandates.
Memory hook
Before selling a life policy, the consumer hears the alternatives and the aftermath.