State RegulationsNY specificDifficulty 1/5
In a New York life settlement transaction, the owner hires a broker to negotiate the sale of her policy. Under the New York Insurance Law, whose interests does the life settlement broker represent?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under N.Y. Ins. Law §7802, a life settlement broker negotiates life settlement contracts on behalf of the owner and represents the owner, owing a fiduciary duty to that owner. This distinguishes the broker from the provider (the party buying the policy), the financing entity (which supplies funding), and the insurer (which issued the policy and plays no brokering role in the settlement). Practically, an owner should receive the broker's undivided loyalty when pricing and negotiating the sale.
Why the other options are wrong
- A) The provider is the buyer; serving the buyer would betray the very person the statute makes the broker represent.
- B) The insurer that issued the policy is not a party the broker represents and has no role in negotiating the settlement.
- C) The financing entity supplies money for the transaction; representing it would conflict with the broker's fiduciary duty to the owner.
Memory hook
The settlement broker works for the seller: owner first, owner only, fiduciary duty attached.