State RegulationsPA specificDifficulty 2/5
A producer introduces a terminally ill policyowner to a viatical settlement company and will be paid by that company for each completed transaction. Under 40 P.S. § 626.7, what must happen regarding this arrangement?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
40 P.S. § 626.7 requires disclosure to the consumer of the compensation that will be paid in connection with the viatical settlement, including amounts paid to the producer or broker who participates in the transaction. A policyowner deciding whether to sell a life policy is entitled to know whether the person guiding the transaction has a financial stake in its completion. Concealing that interest defeats the statute's purpose of informed consent.
Why the other options are wrong
- A) The source of the payment does not matter; the consumer disclosure duty under 40 P.S. § 626.7 attaches regardless of who funds the compensation.
- B) Compensation is not a trade secret; confidentiality is exactly what the disclosure requirement forbids.
- C) The issuing insurer does not approve or police settlement compensation; the duty runs to the consumer under the viatical settlement law.
Memory hook
If the producer gets paid per deal, the seller gets told per statute.