As used in this part 6, unless the context otherwise
requires:
(1) Advertising means any written, electronic, or printed communication or
any communication by means of recorded telephone messages or transmitted on
radio, television, the internet, or similar communications media, including film strips,
motion pictures, and videos, published, disseminated, circulated, or placed directly
before the public in this state for the purpose of creating an interest in or inducing a
person to sell, assign, devise, bequest, or transfer the death benefit or ownership of
a policy pursuant to a viatical settlement contract.
(2) Business of viatical settlements means an activity that involves, but is
not necessarily limited to, the offering, solicitation, negotiation, procurement,
effectuation, purchasing, investing, financing, monitoring, tracking, underwriting,
selling, transferring, assigning, pledging, or hypothecating of viatical settlement
contracts.
(3) Chronically ill, with reference to an individual, means that the individual:
(a) Suffers from a disease or disability that prevents the individual from
independently performing two or more routine but necessary activities of daily
living, which activities include, without limitation, eating, toileting, transferring,
bathing, dressing, or continence;
(b) Requires substantial supervision to protect the individual from threats to
health and safety due to severe cognitive impairment; or
(c) Has a level of disability similar to that described in paragraph (a) of this
subsection (3), as determined by the federal department of health and human
services.
(4) (a) Financing entity means an underwriter, placement agent, lender,
purchaser of securities, purchaser of a policy or certificate from a viatical
settlement provider, credit enhancer, or entity that has a direct ownership in a
policy that is the subject of a viatical settlement contract, and:
(I) Whose principal activity related to the transaction is providing funds to
effect the viatical settlement or purchase of one or more viaticated policies; and
(II) Who has an agreement in writing with one or more licensed viatical
settlement providers to finance the acquisition of viatical settlement contracts or to
provide stop-loss insurance.
(b) Financing entity does not include a nonaccredited investor.
(5) Fraudulent viatical settlement act includes:
(a) An act or omission by a person who, knowingly or with intent to defraud,
for the purpose of depriving another of property or for pecuniary gain, commits or
engages in, or permits its employees or agents to commit or engage in, acts
including:
(I) Presenting, causing to be presented, or preparing with knowledge or
belief that it will be presented to or by a viatical settlement provider, financing
entity, insurer, insurance producer, or other person, false material information, or
concealing material information, as part of, in support of, or concerning a fact
material to one or more of the following:
(A) An application for the issuance of a viatical settlement contract or policy;
(B) The underwriting of a viatical settlement contract or policy;
(C) A claim for payment or benefit pursuant to a viatical settlement contract
or policy;
(D) Premiums paid on a policy;
(E) Payments and changes in ownership or beneficiary made in accordance
with the terms of a viatical settlement contract or policy;
(F) The reinstatement or conversion of a policy;
(G) The solicitation, offer, effectuation, or sale of a viatical settlement
contract or policy;
(H) The issuance of written evidence of a viatical settlement contract or
policy; or
(I) A financing transaction;
(II) Employing any device, scheme, or artifice to defraud related to viaticated
policies;
(b) In the furtherance of a fraud or to prevent the detection of a fraud a
person commits or permits its employees or agents to:
(I) Remove, conceal, alter, destroy, or sequester from the commissioner the
assets or records of a licensee or other person engaged in the business of viatical
settlements;
(II) Misrepresent or conceal the financial condition of a licensee, financing
entity, insurer, or other person;
(III) Transact the business of viatical settlements in violation of laws
requiring a license, certificate of authority, or other legal authority for the
transaction of the business of viatical settlements; or
(IV) File with the commissioner or the chief insurance regulatory official of
another jurisdiction a document containing false information or otherwise conceal
information about a material fact from the commissioner;
(c) Embezzlement, theft, misappropriation, or conversion of moneys, funds,
premiums, credits, or other property of a viatical settlement provider, life insurance
producer, insurer, insured, viator, policyowner, or other person engaged in the
business of viatical settlements or insurance;
(d) Recklessly entering into, negotiating, or otherwise dealing in a viatical
settlement contract, the subject of which is a policy that was obtained by
presenting false information concerning a fact material to the policy, or by
concealing, for the purpose of misleading another, information concerning a fact
material to the policy, where the viator or the viator's agent intended to defraud the
insurance company that issued the policy. Recklessly means engaging in the
conduct in conscious and clearly unjustifiable disregard of a substantial likelihood
of the existence of the relevant facts or risks, when such disregard involves a gross
deviation from acceptable standards of conduct.
(e) Attempting to commit, assist, aid or abet in the commission of, or
conspiracy to commit, the acts or omissions specified in this subsection (5).
(6) Life insurance producer means a person licensed as a resident or
nonresident insurance producer pursuant to article 2 of this title who has received
qualification for life insurance coverage or a life line of coverage pursuant to
section 10-2-407 (1)(a).
(7) NAIC means the national association of insurance commissioners or any
analogous successor organization.
(8) Person means a natural person or a legal entity including, but not
limited to, an individual, partnership, limited liability company, association, trust, or
corporation.
(9) Policy means an individual or group policy, group certificate, contract,
or arrangement of life insurance affecting the rights of a resident of this state or
bearing a reasonable relation to this state, regardless of whether delivered or
issued for delivery in this state.
(10) Related provider trust means a titling trust or other trust established
by a licensed viatical settlement provider or a financing entity for the sole purpose
of holding the ownership or beneficial interest in viaticated policies in connection
with a financing transaction. The trust shall have a written agreement with the
licensed viatical settlement provider under which the licensed viatical settlement
provider is responsible for ensuring compliance with all statutory and regulatory
requirements and under which the trust agrees to make all records and files related
to viatical settlement transactions available to the commissioner as if those records
and files were maintained directly by the licensed viatical settlement provider.
(11) Special purpose entity means a corporation, partnership, trust, limited
liability company, or other similar entity formed only to provide, either directly or
indirectly, access to institutional capital markets for a financing entity or licensed
viatical settlement provider.
(12) Terminally ill means having an illness or sickness that is reasonably
expected to result in death in twenty-four months or less.
(13) Viatical settlement contract means a written agreement establishing
the terms under which compensation or anything of value is paid, which
compensation or value is less than the expected death benefit of the policy, in
return for the viator's assignment, transfer, sale, devise, or bequest of the death
benefit or ownership of any portion of the policy. Viatical settlement contract
includes a contract for a loan or other financing transaction with a viator secured
primarily by an individual or group life insurance policy, other than a loan by a life
insurance company pursuant to the terms of the policy, or a loan secured by the
cash value of a policy. Viatical settlement contract also includes an agreement
with a viator to transfer ownership or change the beneficiary designation at a later
date regardless of the date that compensation is paid to the viator. Viatical
settlement contract does not mean a written agreement entered into between a
viator and a person having an insurable interest in the insured's life.
(14) Viatical settlement provider means a person, other than a viator, who
enters into or effectuates a viatical settlement contract. Viatical settlement
provider does not include:
(a) A bank, savings bank, savings and loan association, credit union, or other
licensed lending institution that takes an assignment of a policy as collateral for a
loan;
(b) The issuer of a policy providing accelerated benefits pursuant to the
policy;
(c) An authorized or eligible insurer that provides stop-loss coverage to a
viatical settlement provider, financing entity, special purpose entity, or related
provider trust;
(d) A natural person who enters into or effectuates no more than one
agreement in a calendar year for the transfer of policies for any value less than the
expected death benefit;
(e) A financing entity;
(f) A special purpose entity;
(g) A related provider trust; or
(h) An accredited investor or qualified institutional buyer as defined,
respectively, in regulation D, rule 501, or rule 144A of the federal Securities Act of
1933, as amended, who purchases a viaticated policy from a viatical settlement
provider.
(15) Viaticated policy means a policy that has been acquired by a viatical
settlement provider pursuant to a viatical settlement contract.
(16) Viator means the owner of a policy who is a resident of this state and
who enters or seeks to enter into a viatical settlement contract. For the purposes of
this part 6, a viator is not limited to an owner of a policy insuring the life of an
individual with a terminal or chronic illness or condition except where specifically
addressed. If there is more than one owner on a single policy and the owners are
residents of different states, the transaction shall be governed by the law of the
state in which the owner having the largest percentage ownership resides or, if the
owners hold equal ownership, the state of residence of one owner agreed upon in
writing by all owners. Viator does not include:
(a) A licensee as provided by this part 6, including a life insurance producer;
(b) An accredited investor or qualified institutional buyer as defined,
respectively, in regulation D, rule 501, or rule 144A of the federal Securities Act of
1933, as amended;
(c) A financing entity;
(d) A special purpose entity; or
(e) A related provider trust.