1 | A bill to be entitled |
2 | An act relating to insurable interests; amending s. |
3 | 627.404, F.S.; authorizing certain trusts, partnerships, |
4 | and limited liability companies to own or purchase life |
5 | insurance on an insured under certain circumstances; |
6 | providing requirements; requiring approval of the |
7 | Department of Financial Services; prohibiting assigning or |
8 | transferring, changing ownership or beneficiary |
9 | designation, or taking out a loan against such policies |
10 | under certain circumstances; providing for taking such |
11 | actions under a license; providing an effective date. |
12 |
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13 | Be It Enacted by the Legislature of the State of Florida: |
14 |
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15 | Section 1. Subsections (3), (4), and (5) are added to |
16 | section 627.404, Florida Statutes, to read: |
17 | 627.404 Insurable interest; personal insurance.-- |
18 | (3) Any trust, partnership, limited liability company, or |
19 | similar entity that is approved in writing by a public or |
20 | private university in this state that receives state funds, or |
21 | affiliated foundations of such university, and meets the |
22 | requirements of s. 501(c)(3) of the Internal Revenue Code of |
23 | 1986, as amended, or by a public or private university in this |
24 | state that receives state funds, or the affiliated foundation of |
25 | such university, to which a charitable contribution could be |
26 | made under s. 170(c)(1), (2), or (3) of the Internal Revenue |
27 | Code of 1986, as amended, may own or purchase life insurance on |
28 | an insured who consents in writing to the ownership or purchase |
29 | of that insurance, subject to the following: |
30 | (a) The approved trust, partnership, limited liability |
31 | company, or similar entity must be, in part, formed for the |
32 | purpose of generating funds for one or more designated public or |
33 | private universities in this state that receive state funds or |
34 | affiliated foundations of such universities. |
35 | (b) The approved trust, partnership, limited liability |
36 | company, or similar entity must procure or cause to be procured |
37 | a combination of life insurance policies and annuity contracts |
38 | on the life of consenting individual insureds. Payments under |
39 | the annuity contracts shall be reasonably anticipated to fund |
40 | the premiums on the life insurance policies for the second and |
41 | succeeding years. |
42 | (c) At least 99 percent of all funds used by the approved |
43 | trust, partnership, limited liability company, or similar entity |
44 | to procure the life insurance policies and annuity contracts |
45 | must be from qualified institutional buyers as defined by Rule |
46 | 144A of the Federal Securities Act of 1933 or proceeds from |
47 | annuity contracts or other insurance policies procured with the |
48 | funds invested by qualified institutional buyers, and interest |
49 | income on such funds. |
50 | (d) The investment in the approved trust, partnership, |
51 | limited liability company, or similar entity by qualified |
52 | institutional buyers shall be pursuant to a nonpublic offering |
53 | or a public offering through a registered broker or dealer under |
54 | the Securities Exchange Act of 1934. |
55 | (e) No qualified institutional buyer may procure or hold |
56 | any direct interest in the life insurance policies or the |
57 | annuity contracts, or the benefits from such policies or |
58 | contracts, except as part of a securitized transaction, subject |
59 | to chapter 517 or federal securities laws. |
60 | (f) The public or private university in this state that |
61 | receives state funds, or affiliated foundations of such |
62 | university, as designated by the individual insured, must, at |
63 | the time of the acquisition of the life insurance policies by |
64 | the approved trust, partnership, limited liability company, or |
65 | similar entity, reasonably anticipate receiving death benefit |
66 | proceeds of each life insurance policy on such individual |
67 | insured after the return of the amount invested and yield |
68 | accrued and payable to the qualified institutional buyers in |
69 | accordance with the securities offering or other disclosure |
70 | materials. The reasonably anticipated minimum percentage or |
71 | amount of the death benefit proceeds of the life insurance |
72 | policies to be ultimately received by such designated |
73 | university, or affiliated foundations of such university, must |
74 | be disclosed in the relevant securities offering or other |
75 | disclosure materials used in any offering. |
76 | (g) The individual insured and each designated public or |
77 | private university in this state that receives state funds, or |
78 | affiliated foundations of such university, must be informed, |
79 | prior to the ownership or purchase of life insurance on the |
80 | individual insured by the approved trust, partnership, limited |
81 | liability company, or similar entity, of the minimum percentage |
82 | or amount of the proceeds of the life insurance policy that is |
83 | reasonably anticipated to be ultimately paid to the designated |
84 | organization. |
85 | (h) The individual insured must provide an affidavit |
86 | stating that the individual insured, any relative of the |
87 | individual insured as defined in s. 112.312(21), and any entity |
88 | controlled by the individual insured or relative, other than a |
89 | public or private university in this state that receives state |
90 | funds, or affiliated foundations of such university, did not |
91 | receive any monetary remuneration in consideration for the |
92 | individual insured's consent to purchase the life insurance |
93 | policy, except third party expenses incurred in connection with |
94 | the grant of such consent. |
95 | (4) Transactions involving the procurement or funding of |
96 | the procurement of a life insurance policy or annuity contract |
97 | pursuant to subsection (3) are prohibited without the prior |
98 | approval of the Department of Financial Services in consultation |
99 | with the Office of Financial Regulation and Office of Insurance |
100 | Regulation, which approval shall only be provided upon a |
101 | determination that the planned transaction meets the |
102 | requirements of subsection (3), is fiscally prudent, and is |
103 | determined to be in the best interest of the citizens of this |
104 | state. Upon approval, a trust, partnership, limited liability |
105 | company, or similar entity that meets the requirements of |
106 | subsection (3) has an insurable interest in the life of the |
107 | individual insured. |
108 | (5) With respect to the approved trust, partnership, |
109 | limited liability company, or similar entity described in |
110 | subsection (3), except in the case of a material default of, or |
111 | commencement of a delinquency proceeding against, the life |
112 | insurer or annuity company or the life insurer or annuity |
113 | company exercising its right to contest the life insurance |
114 | policy or annuity contract: |
115 | (a) The life insurance policies procured or caused to be |
116 | procured by such entity may not be assigned or transferred by |
117 | such entity; |
118 | (b) The ownership or beneficiary designation in favor of |
119 | such entity of the life insurance policies procured or caused to |
120 | be procured by such entity may not be changed; or |
121 | (c) A policy loan under the life insurance policies |
122 | procured or caused to be procured by such entity may not be |
123 | taken out by such entity, |
124 |
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125 | unless such entity applies for and obtains a license pursuant to |
126 | the provisions of s. 626.9912 prior to transferring or assigning |
127 | the policy, changing the ownership or beneficiary designation of |
128 | the policy, or taking out a loan against the policy. All |
129 | transactions under s. 626.9912 are subject to chapter 571. |
130 | Section 2. This act shall take effect upon becoming a law. |