The following words and phrases when used in this act shall have the meanings given to them in this section unless the context clearly indicates otherwise:
“Advertising.” 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 before the public, directly or indirectly, for the purpose of creating an interest in or inducing a person to sell a life insurance policy pursuant to a viatical settlement contract.
“Business of viatical settlements.” An activity involved in, but not limited to, the offering, solicitation, negotiation, procurement, effectuation, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning or pledging viatical settlement contracts in this Commonwealth.
“Chronically ill.” A condition which means a person:
(1) is unable to perform at least two activities of daily living, including, but not limited to, eating, toileting, transferring, bathing, dressing or continence; or
(2) requires substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.
“Commissioner.” The Insurance Commissioner of the Commonwealth.
“Department.” The Insurance Department of the Commonwealth.
“Financing entity.” An entity other than a nonaccredited investor or viatical settlement purchaser that has a direct ownership in a policy or certificate that is the subject of a viatical settlement contract, and:
(1) the entity's principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more viaticated policies; and
(2) the entity has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts.
“Fraudulent viatical settlement act.” An act or omission committed by any person who, knowingly or with intent to defraud, for the purpose of depriving another of property or for pecuniary gain commits or permits its employees or its agents to commit any of the following acts:
(1) Presenting, causing to be presented or preparing with knowledge or belief that it will be presented to or by a viatical settlement provider, viatical settlement broker, viatical settlement purchaser, financing entity, insurer, insurance broker, insurance agent or any 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:
(i) An application for the issuance of a viatical settlement contract or insurance policy.
(ii) The underwriting of a viatical settlement contract or insurance policy.
(iii) A claim for payment or benefit pursuant to a viatical settlement contract or insurance policy.
(iv) Premiums paid on an insurance policy.
(v) Payments and changes in ownership or beneficiary made in accordance with the terms of a viatical settlement contract or insurance policy.
(vi) The reinstatement or conversion of an insurance policy.
(vii) The solicitation, offer, effectuation or sale of a viatical settlement contract or insurance policy.
(viii) The issuance of written evidence of a viatical settlement contract or insurance.
(ix) A financing transaction.
(2) In the furtherance of a fraud or to prevent the detection of a fraud:
(i) destroys, removes, conceals or alters the assets or records of a licensee or other person engaged in the business of viatical settlements;
(ii) misrepresents or conceals the financial condition of a licensee or insurer;
(iii) transacts 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) files with the Insurance Commissioner, the Insurance Department or the chief insurance regulatory official or agency of another jurisdiction a document containing false information or otherwise conceals information about a material fact.
(3) Presenting, causing to be presented or preparing with knowledge or reason to believe that it will be presented to or by a viatical settlement provider, viatical settlement broker, insurer, insurance agent, financing entity, viatical settlement purchaser or any other person, in connection with a viatical settlement transaction or insurance transaction, an insurance policy, knowing the policy was fraudulently obtained by the insured, owner or any agent thereof.
(4) Embezzlement, theft, misappropriation or conversion of moneys, funds, premiums, credits or other property of a viatical settlement provider, insurer, insured, viator, insurance policy owner or any other person engaged in the business of viatical settlements or insurance.
(5) Attempting to commit, assisting, aiding or abetting in the commission of or the conspiracy to commit the acts or omissions specified in this subsection.
“Independent escrow agent.” A person designated by the viatical settlement provider and recognized by the Insurance Commissioner to accept, transmit and pay the proceeds of the viatical settlement.
“Insurer.” Any properly licensed life insurance company, association or exchange.
“Licensee.” A viatical settlement provider or viatical settlement broker.
“Policy.” An individual or group policy, group certificate, contract or arrangement of life insurance affecting the rights of a resident of this Commonwealth regardless of whether delivered or issued for delivery in this Commonwealth.
“Related provider trust.” A titling trust or other trust established by a licensed viatical settlement provider or financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction, which trust:
(1) has 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
(2) has a written agreement with the licensed viatical settlement provider under which the trust agrees to make all records and files related to viatical settlement transactions available to the Insurance Department as if those records and files were maintained directly by the licensed viatical settlement provider.
“Special purpose entity.” A corporation, partnership, trust, limited liability company or other similar entity other than a natural person formed solely to provide, either directly or indirectly, access to institutional capital markets for a financing entity or licensed viatical settlement provider.
“Terminally ill.” Having an illness or sickness that can reasonably be expected to result in death in 24 months or less.
“Viatical settlement broker.” A person that on behalf of a viator and for a fee, commission or other valuable consideration offers to negotiate or attempts to negotiate viatical settlements between a viator and one or more viatical settlement providers. The term does not include an attorney, certified public accountant or financial planner accredited by a nationally recognized accreditation agency who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider or purchaser. The term also does not include an investment advisor registered under the Investment Advisers Act of 1940 ( 15 U.S.C. § 80b-1 et seq. ) or the act of December 5, 1972 (P.L. 1280, No. 284), 1 known as the Pennsylvania Securities Act of 1972, possessing a designation recognized by the Pennsylvania Securities Commission for the purposes of waiving any examination requirement under the Pennsylvania Securities Act of 1972, who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider or purchaser.
“Viatical settlement contract.” A written agreement entered into between a viatical settlement provider and a person owning a policy or group policy establishing the terms under which compensation or anything of value will be paid, which compensation or value is less than the expected death benefit of the insurance policy or certificate, in return for the viator's assignment, transfer, sale, devise or bequest of the death benefit or ownership of any portion of the insurance policy or certificate of insurance. The term also includes a contract for a loan or other financing transaction 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 life insurance contract, or a loan secured by the cash value of a policy. A viatical settlement contract includes an agreement to transfer ownership or change the beneficiary designation at a later date regardless of the date that compensation is paid to the viator. This term shall not include a written agreement entered into between a viator and a person having an insurable interest in the viator's life.
“Viatical settlement provider.” A person other than a viator that enters into or effectuates a viatical settlement contract. The term does not include:
(1) a bank, bank and trust, savings bank, savings and loan association, credit union or other licensed lending institution that takes an assignment of a life insurance policy as collateral for a loan;
(2) the issuer of a life insurance policy providing accelerated benefits pursuant to the contract;
(3) an authorized or eligible insurer that provides stop loss coverage to a viatical settlement provider, purchaser, financing entity, special purpose entity or related provider trust;
(4) a natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of life insurance policies for any value less than the expected death benefit;
(5) a financing entity;
(6) a special purpose entity;
(7) a related provider trust;
(8) a viatical settlement purchaser; or
(9) an accredited investor, qualified institutional buyer or qualified purchaser as defined respectively in 17 CFR § 230.501 (relating to definitions and terms used in Regulation D), 17 CFR § 230.144A (relating to private resales of securities to institutions), section 18(b)(3) of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77c et seq. ) and who purchases a viaticated policy from a licensed viatical settlement provider.
“Viatical settlement purchaser.” A person who gives a sum of money as consideration for a life insurance policy or an interest in the death benefits of a life insurance policy or a person who owns, acquires or is entitled to a beneficial interest in a trust that owns a viatical settlement contract or is the beneficiary of a life insurance policy which has been or will be the subject of a viatical settlement contract for the purpose of deriving an economic benefit. A viatical settlement purchaser does not include:
(1) a licensee under this act;
(2) an accredited investor, qualified institutional buyer or qualified purchaser as defined respectively in 17 CFR § 230.501 (relating to definitions and terms used in Regulation D), 17 CFR § 230.144A (relating to private resales of securities to institutions) and section 18(b)(3) of the Securities Act of 1933 (48 Stat. 74, 15 U.S.C. § 77c et seq. ) and who purchases a viaticated policy from a viatical settlement provider;
(3) a financing entity;
(4) a special purpose entity; or
(5) a related provider trust.
“Viaticated policy.” A life insurance policy or certificate that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract.
“Viator.” The owner of a life insurance policy or a certificate holder under a group policy who enters or seeks to enter into a viatical settlement contract. For the purposes of this act, a viator shall not be limited to an owner of a life insurance policy or a certificate holder under a group policy insuring the life of an individual with a terminal or chronic illness or condition except where specifically addressed in this act. The term does not include:
(1) a licensee under this act;
(2) an accredited investor or qualified institutional buyer as defined respectively in 17 CFR § 230.501 (relating to definitions and terms used in Regulation D), 17 CFR § 230.144A (relating to private resales of securities to institutions);
(3) a financing entity;
(4) a special purpose entity; or
(5) a related provider trust.
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