Connecticut Life Producer Practice exam

How should an individual proceed if they wish to rescind a life settlement contract?

1. Notify their employer immediately.

2. Submit a new application for coverage.

3. Return the settlement proceeds along with a written notice.

4. Wait for the insurer to contact them.

The correct answer is: Return the settlement proceeds along with a written notice.

To rescind a life settlement contract, an individual must follow a specific process to ensure they are legally withdrawing from the agreement. Returning the settlement proceeds along with a written notice is the correct course of action; this ensures that both parties are aware of the rescission and that any funds exchanged are properly addressed. The written notice serves as formal documentation of the individual’s intent to rescind, while returning the proceeds ensures that the settlement is undone in a manner that complies with legal requirements. This process is crucial because life settlements are regulated transactions, and adhering to the specified steps protects the rights of both the seller and the buyer. This action typically involves a clear communication of the individual's intention to back out of the contract, which helps avoid any potential disputes or misunderstandings regarding the settlement.