Montana State Life Insurance Practice Exam

Under what circumstance can an individual act as a viatical settlement provider without a license?

1. If they are a member of a licensed firm

2. If they are a direct relative of the viator

3. If they have held a prior insurance license

4. If they only provide advice

The correct answer is: If they are a member of a licensed firm

The correct answer pertains to individuals acting as viatical settlement providers when they are members of a licensed firm. In the context of insurance and regulatory frameworks, viatical settlements involve the purchase of a life insurance policy from the policyholder (the viator) by a third party, usually for less than the policy's face value, and while the practice is typically regulated, exceptions exist. When an individual is part of a licensed firm, they are permitted to operate under the firm's licensure. This means that the firm has gone through the necessary regulatory processes to obtain its license, thereby providing legitimacy and covering its members under the firm's operations. It allows individuals to engage in activities that would otherwise require personal licensing, as they are working under the governance and compliance framework of the licensed entity. In contrast, being a direct relative of the viator or having previously held an insurance license does not automatically confer the right to act as a viatical settlement provider without a current and applicable license. Similarly, merely providing advice does not qualify someone to engage in the buying or selling of viatical settlements without appropriate licensure. These distinctions underline the importance of maintaining regulatory adherence and protecting both consumers and practitioners in the insurance industry.