State RegulationsNY specificDifficulty 2/5
A Rochester consultant negotiates the sale of a client's life insurance policy to a settlement company for a fee, holding no New York license to act as a life settlement broker. What is the consequence under New York law?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under N.Y. Ins. Law §2102(a)(1) and §2137, negotiating life settlements for owners for compensation is brokering activity that requires the proper New York license. Doing it unlicensed violates the Insurance Law and exposes the consultant to enforcement by the Superintendent of Financial Services. Neither the client's consent nor a license obtained afterward can retroactively legitimize the unlicensed activity.
Why the other options are wrong
- B) The owner's consent does not cure an unlicensed activity — licensing protects the public regardless of private agreement.
- C) The purchasing company must hold a provider license, but the person negotiating for owners must independently be licensed as a broker; both sides are regulated.
- D) Licensing is a precondition, not a cure — obtaining a license after the fact does not erase the prior violation.
Memory hook
Consent does not license: unlicensed life settlement brokering is a violation whenever it happens.