Connecticut Life Producer Practice exam

When can a life settlement contract typically not be rescinded?

1. After 15 days of receiving proceeds.

2. At any time before death.

3. After the insured turns 65.

4. Only when fraud is suspected.

The correct answer is: After 15 days of receiving proceeds.

A life settlement contract typically cannot be rescinded after 15 days of receiving proceeds because this period serves as a protection for both parties involved. Upon receiving the proceeds, the policyholder has made a decision that is considered final, which reinforces the commitment to the terms of the settlement contract. This gives the policyholder a short window to reconsider their choice and ensures that they are fully informed before finalizing the transaction. After this period, the contract is binding, and the policyholder cannot reverse their decision without significant cause, such as fraud. Other options, such as the timing related to the insured turning 65 or the ability to rescind before death, do not align with standard practices in life settlement contracts. The validity of such contracts does not hinge on the age of the insured, nor can they be freely rescinded at any point prior to the death of the insured, as that would undermine the contractual agreement and financial stability expected from both parties. Additionally, fraud as a condition for rescinding typically does not apply after the specified time period following the receipt of proceeds, since the intention and agreement of both parties are affirmed once the transaction is completed.