38.2-6000 - Definitions.
§ 38.2-6000. Definitions.
As used in this chapter:
"Advertising" means any written, electronic, or printed communication orany communication by means of recorded telephone messages or transmitted onradio, television, the Internet, or similar communications media, includingfilm strips, motion pictures, and videos published, disseminated, circulatedor placed before the public, directly or indirectly, for the purpose ofcreating an interest in or inducing a person to sell a life insurance policypursuant to a viatical settlement contract.
"Business of viatical settlements" means an activity involved in, but notlimited to, the offering, solicitation, negotiation, procurement,effectuation, purchasing, investing, financing, monitoring, tracking,underwriting, selling, transferring, assigning, pledging, or hypothecating inany other manner, of viatical settlement contracts or purchase agreements.
"Chronically ill" means (i) being unable to perform at least two activitiesof daily living, which shall include eating, toileting, transferring,bathing, dressing or continence, (ii) requiring substantial supervision byanother person to protect the individual from threats to health and safetydue to severe cognitive impairment, or (iii) having a level of disabilitysimilar to that described in clause (i) as determined by the federalSecretary of Health and Human Resources.
"Financing entity" means an underwriter, placement agent, lender, purchaserof securities, purchaser of a policy or certificate from a viaticalsettlement provider, credit enhancer, or any entity that has a directownership in a policy or certificate that is the subject of a viaticalsettlement contract, but whose principal activity related to the transactionis providing funds to effect the viatical settlement or purchase of one ormore viaticated policies and who has an agreement in writing with one or morelicensed viatical settlement providers to finance the acquisition of viaticalsettlement contracts. Financing entity does not include a non-accreditedinvestor or viatical settlement purchaser.
"Fraudulent viatical settlement act" includes:
1. Acts or omissions committed by any person who, knowingly or with intent todefraud, for the purpose of depriving another of property or for pecuniarygain, commits or permits its employees or its agents to engage in actsincluding:
a. Presenting, causing to be presented or preparing with knowledge or beliefthat it will be presented to or by a viatical settlement provider, viaticalsettlement broker, viatical settlement purchaser, financing entity, insurer,insurance producer, or any other person, false material information, orconcealing material information, as part of, in support of, or concerning afact material to one or more of the following: (i) an application for theissuance of a viatical settlement contract or insurance policy; (ii) theunderwriting of a viatical settlement contract or insurance policy; (iii) aclaim for payment or benefit pursuant to a viatical settlement contract orinsurance policy; (iv) premiums paid on an insurance policy; (v) payments andchanges in ownership or beneficiary made in accordance with the terms of aviatical settlement contract, or insurance policy; (vi) the reinstatement orconversion of an insurance policy; (vii) in 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 orinsurance policy; or (ix) a financing transaction;
b. Employing any device, scheme, or artifice to defraud related to viaticatedpolicies;
2. In the furtherance of a fraud or to prevent the detection of a fraud anyperson commits or permits its employees or its agents to: (i) remove,conceal, alter, destroy, or sequester from the Commission the assets orrecords of a licensee or other person engaged in the business of viaticalsettlements; (ii) misrepresent or conceal the financial condition of alicensee, financing entity, insurer, or other person; (iii) transact thebusiness of viatical settlements in violation of laws requiring a license,certificate of authority, or other legal authority for the transaction of thebusiness of viatical settlements; or (iv) file with the Commission or thechief insurance regulatory official of another jurisdiction a documentcontaining false information or otherwise conceals information about amaterial fact from the Commission;
3. Embezzlement, theft, misappropriation or conversion of moneys, funds,premiums, credits, or other property of a viatical settlement provider,insurer, insured, viator, insurance policyowner, or any other person engagedin the business of viatical settlements or insurance;
4. Recklessly entering into, brokering, or otherwise dealing in a viaticalsettlement contract, the subject of which is a life insurance policy that wasobtained by presenting false information concerning any fact material to thepolicy or by concealing, for the purpose of misleading another, informationconcerning any fact material to the policy, where the viator or the viator'sagent intended to defraud the policy's issuer. "Recklessly" means engagingin the conduct in conscious and clearly unjustifiable disregard of asubstantial likelihood of the existence of the relevant facts or risks, suchdisregard involving a gross deviation from acceptable standards of conduct; or
5. Attempting to commit, assisting, aiding or abetting in the commission of,or conspiracy to commit the acts or omissions specified in this subsection.
"Licensee under this chapter" means a person licensed by the Commission asa viatical settlement provider or viatical settlement broker.
"NAIC" means National Association of Insurance Commissioners.
"Policy" means an individual or group policy, group certificate, contractor arrangement of life insurance affecting the rights of a resident of thisCommonwealth or bearing a reasonable relation to this Commonwealth,regardless of whether delivered or issued for delivery in this Commonwealth.
"Related provider trust" means a titling trust or other trust establishedby a licensed viatical settlement provider or a financing entity for the solepurpose of holding the ownership or beneficial interest in purchased policiesin connection with a financing transaction. The trust shall have a writtenagreement with the licensed viatical settlement provider under which thelicensed viatical settlement provider is responsible for ensuring compliancewith all statutory and regulatory requirements and under which the trustagrees to make all records and files related to viatical settlementtransactions available to the Commission as if those records and files weremaintained directly by the licensed viatical settlement provider.
"Special purpose entity" means a corporation, partnership, trust, limitedliability company, or other similar entity formed solely to provide eitherdirectly or indirectly access to institutional capital markets for afinancing entity or licensed viatical settlement provider.
"Terminally ill" means having an illness or sickness that can reasonably beexpected to result in death in 24 months or less.
"Viatical settlement broker" means a person that on behalf of another andfor a fee, commission or other valuable consideration introduces viators toviatical settlement providers, or offers or attempts to negotiate viaticalsettlement contracts between a viator and one or more viatical settlementproviders. A viatical settlement broker may act as agent for a viaticalsettlement provider or on behalf of the viator, provided that a viaticalsettlement broker shall not be deemed to act exclusively for the viatorunless, pursuant to written agreement between the parties, the broker agrees(i) to disclose fully all interests in the viatical settlement contract andrelationships with the viatical settlement provider, including its affiliatesand appointed or contracted agents, and (ii) that compensation for servicesas a viatical settlement broker shall be paid directly and only by theviator. The term does not include an attorney, certified public accountant,or a financial planner accredited by a nationally recognized accreditationagency, who is retained to represent the viator and whose compensation is notpaid directly or indirectly by the viatical settlement provider or viaticalsettlement purchaser.
"Viatical settlement contract" means a written agreement establishing theterms under which compensation or anything of value will be paid, whichcompensation or value is less than the expected death benefit of theinsurance policy or certificate, in return for the viator's assignment,transfer, sale, devise or bequest of the death benefit or ownership of anyportion of the insurance policy or certificate of insurance. A viaticalsettlement contract also includes a contract for a loan or other financingtransaction with a viator secured primarily by an individual or group lifeinsurance policy, other than a loan by a life insurance company pursuant tothe terms of the life insurance contract, or a loan secured by the cash valueof a policy. A viatical settlement contract includes an agreement with aviator to transfer ownership or change the beneficiary designation at a laterdate regardless of the date that compensation is paid to the viator."Viatical settlement contracts" do not include accelerated benefitsprovisions contained in life insurance policies, whether issued with theoriginal policy or as a rider, according to the regulations promulgated bythe Commission.
"Viatical settlement provider" means a person, other than a viator, thatenters into or effectuates a viatical settlement contract. Viaticalsettlement provider does not include: (i) a bank, savings bank, savings andloan association, credit union, or other licensed lending institution thattakes an assignment of a life insurance policy as collateral for a loan; (ii)the issuer of a life insurance policy providing accelerated benefits under §38.2-3115.1 and pursuant to the contract; (iii) an authorized or eligibleinsurer that provides stop loss coverage to a viatical settlement provider,viatical settlement purchaser, financing entity, special purpose entity orrelated provider trust; (iv) a natural person who enters into or effectuatesno more than one agreement in a calendar year for the transfer of lifeinsurance policies for any value less than the expected death benefit; (v) afinancing entity; (vi) a special purpose entity; (vii) a related providertrust; (viii) a viatical settlement purchaser; or (ix) an accredited investoror qualified institutional buyer as defined respectively in Regulation D,Rule 501 or Rule 144A of the Federal Securities Act of 1933, as amended, andwho purchases a viaticated policy from a viatical settlement provider anddoes not communicate with the viator or insured who is a resident of thisCommonwealth except through a licensee under this chapter.
"Viatical settlement purchaser" means a person who gives a sum of money asconsideration for a life insurance policy or an interest in the deathbenefits of a life insurance policy, or a person who owns or acquires or isentitled to a beneficial interest in a trust that owns a viatical settlementcontract or is the beneficiary of a life insurance policy that has been orwill be the subject of a viatical settlement contract, for the purpose ofderiving an economic benefit. Viatical settlement purchaser does not include(i) a licensee under this chapter; (ii) an accredited investor or qualifiedinstitutional buyer as defined respectively in Regulation D, Rule 501 or Rule144A of the Federal Securities Act of 1933, as amended; (iii) a financingentity; (iv) a special purpose entity; or (v) a related provider trust.
"Viaticated policy" means a life insurance policy or certificate that hasbeen acquired by a viatical settlement provider pursuant to a viaticalsettlement contract.
"Viator" means the owner of a life insurance policy or a certificate holderunder a group policy who enters or seeks to enter into a viatical settlementcontract. For the purposes of this chapter and the application of Article 6.1(§ 38.2-1865.1 et seq.) of Chapter 18 of this title, a viator shall not belimited to an owner of a life insurance policy or a certificate holder undera group policy insuring the life of an individual with a terminal or chronicillness except where specifically addressed. Viator does not include (i) alicensee under this chapter; (ii) an accredited investor or qualifiedinstitutional buyer as defined respectively in Regulation D, Rule 501 or Rule144A of the Federal Securities Act of 1933, as amended; (iii) a financingentity; (iv) a special purpose entity; or (v) a related provider trust.
(1997, c. 814, § 38.2-5700; 2003, c. 717.)