Mass. Gen. Laws ch. 175, sec. 223A — MA Code / Part I / Title XXII / Chapter 175 / Section 223A
Fraudulent life settlement acts
Status: in_force

Section 223A. (a) A person shall not commit a fraudulent life settlement act. (b) ''Fraudulent life settlement act'' shall mean: (1) an act or omission committed by a person who, in connection with a life settlement contract, knowingly and with an intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits or permits its employees or its agents to engage in acts including, but not limited to: (i) presenting, causing to be presented or preparing with knowledge and belief that it will be presented to or by a life settlement provider, premium finance lender, life settlement broker, insurer, insurance producer or any other person, false material information or concealing material information, as part of, in support of or concerning a fact material to any of the following: (A) an application for the issuance of a life settlement contract or insurance policy; (B) the underwriting of a life settlement contract or insurance policy; (C) a claim for payment or benefit pursuant to a life settlement contract or insurance policy; (D) premiums paid on an insurance policy; (E) payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or insurance policy; (F) the reinstatement or conversion of an insurance policy; (G) the solicitation, offer to enter into or effectuation of, a life settlement contract or insurance policy; (H) the issuance of written evidence of life settlement contracts or insurance; (I) an application for, or the existence of or any payments related to, a loan secured directly or indirectly by an interest in a life insurance policy; or (J) engaging in stranger-originated life insurance. (ii) failing to disclose to the insurer, where the request for such disclosure has been asked for by the insurer, that the prospective insured has undergone a life expectancy evaluation by a person or entity other than the insurer or its authorized representatives in connection with the issuance of the policy. (iii) employing any device, scheme or artifice to defraud in the business of life settlements. (2) acts committed by a person or that such person permits an employee or agent to commit in the furtherance of a fraud or to prevent the detection of fraud: (i) to remove, conceal, alter, destroy or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of life settlements; (ii) to misrepresent or conceal the financial condition of a licensee, financing entity, insurer or other person; (iii) to transact the business of life settlements in violation of laws requiring a license, certificate of authority or other legal authority for the transaction of the business of life settlements; (iv) to file with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner; (v) to engage in embezzlement, theft, misappropriation or conversion of money, funds, premiums, credits or other property of a life settlement provider, insurer, insured, owner, insurance policy owner or other person engaged in the business of life settlements or insurance; (vi) to knowingly and with an intent to defraud, enter into, broker or otherwise deal in a life settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information requested concerning any fact material to the policy, where the owner or the owner's agent intended to defraud the policy's issuer; (vii) to attempt to commit, assist, aid or abet in the commission of, or conspiracy to commit the acts or omissions specified in this subsection; or (viii) to misrepresent the state of residence of an owner to be a state or jurisdiction that does not have a law substantially similar to sections 213 to 223E, inclusive, for the purpose of evading or avoiding the provisions of said sections 213 to 223E, inclusive. (c) It shall also be a fraudulent life settlement act for a person to: (1) enter into a life settlement contract if such person knows or reasonably should have known that the policy was obtained by means of a false, deceptive or misleading application for such policy; (2) engage in a transaction, practice or course of business if such person knows or reasonably should have known that the intent was to avoid the notice requirements of sections 213 to 223E, inclusive; (3) engage in a fraudulent act or practice in connection with a transaction relating to a settlement involving an owner who is a resident of the commonwealth; (4) issue, solicit or market the purchase of a new policy for the purpose of or with a significant emphasis on settling the policy; (5) if providing premium financing, receive any proceeds, fees or other consideration from the policy or owner of the policy that are in addition to the amounts required to pay principal, interest and any reasonable costs or expenses incurred by the lender or borrower in connection with the premium finance agreement, except in the event of a default, unless either the default on the loan or transfer of the policy occurs pursuant to an agreement or understanding with another person for the purpose of evading regulation under sections 213 to 223E, inclusive; (6) with respect to any life settlement contract or insurance policy and a life settlement broker, knowingly solicit an offer from, effectuate a life settlement contract with or make a sale to a life settlement provider, financing entity or related provider trust that is controlling, controlled by or under common control with such life settlement broker unless the relationship is disclosed to the owner; (7) with respect to a life settlement contract or insurance policy and a life settlement provider, knowingly enter into a life settlement contract with an owner if, in connection with the life settlement contract, anything of value will be paid to a life settlement broker that is controlling, controlled by or under common control with the life settlement provider, the financing entity or a related provider trust that is involved in the life settlement contract unless the relationship is disclosed to the owner; (8) create a trust that gives the appearance of insurable interest and is used to initiate policies for investors; (9) include any reference in an advertisement that would cause an owner to reasonably believe that the insurance is free for any period of time; or (10) with respect to a life insurance producer, insurance company, life settlement broker or life settlement provider, make a statement or representation to the applicant or policyholder in connection with the sale or financing of a policy to the effect that the policy is free or without cost to the policyholder for any period of time unless provided in the policy. (d) The commissioner may investigate suspected fraudulent life settlement acts and persons engaged in the business of life settlements.

Section 223A. (a) A person shall not commit a fraudulent life settlement act.

(b) ''Fraudulent life settlement act'' shall mean:

(1) an act or omission committed by a person who, in connection with a life settlement contract, knowingly and with an intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits or permits its employees or its agents to engage in acts including, but not limited to:

(i) presenting, causing to be presented or preparing with knowledge and belief that it will be presented to or by a life settlement provider, premium finance lender, life settlement broker, insurer, insurance producer or any other person, false material information or concealing material information, as part of, in support of or concerning a fact material to any of the following:

(A) an application for the issuance of a life settlement contract or insurance policy;

(B) the underwriting of a life settlement contract or insurance policy;

(C) a claim for payment or benefit pursuant to a life settlement contract or insurance policy;

(D) premiums paid on an insurance policy;

(E) payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or insurance policy;

(F) the reinstatement or conversion of an insurance policy;

(G) the solicitation, offer to enter into or effectuation of, a life settlement contract or insurance policy;

(H) the issuance of written evidence of life settlement contracts or insurance;

(I) an application for, or the existence of or any payments related to, a loan secured directly or indirectly by an interest in a life insurance policy; or

(J) engaging in stranger-originated life insurance.

(ii) failing to disclose to the insurer, where the request for such disclosure has been asked for by the insurer, that the prospective insured has undergone a life expectancy evaluation by a person or entity other than the insurer or its authorized representatives in connection with the issuance of the policy.

(iii) employing any device, scheme or artifice to defraud in the business of life settlements.

(2) acts committed by a person or that such person permits an employee or agent to commit in the furtherance of a fraud or to prevent the detection of fraud:

(i) to remove, conceal, alter, destroy or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of life settlements;

(ii) to misrepresent or conceal the financial condition of a licensee, financing entity, insurer or other person;

(iii) to transact the business of life settlements in violation of laws requiring a license, certificate of authority or other legal authority for the transaction of the business of life settlements;

(iv) to file with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner;

(v) to engage in embezzlement, theft, misappropriation or conversion of money, funds, premiums, credits or other property of a life settlement provider, insurer, insured, owner, insurance policy owner or other person engaged in the business of life settlements or insurance;

(vi) to knowingly and with an intent to defraud, enter into, broker or otherwise deal in a life settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information requested concerning any fact material to the policy, where the owner or the owner's agent intended to defraud the policy's issuer;

(vii) to attempt to commit, assist, aid or abet in the commission of, or conspiracy to commit the acts or omissions specified in this subsection; or

(viii) to misrepresent the state of residence of an owner to be a state or jurisdiction that does not have a law substantially similar to sections 213 to 223E, inclusive, for the purpose of evading or avoiding the provisions of said sections 213 to 223E, inclusive.

(c) It shall also be a fraudulent life settlement act for a person to:

(1) enter into a life settlement contract if such person knows or reasonably should have known that the policy was obtained by means of a false, deceptive or misleading application for such policy;

(2) engage in a transaction, practice or course of business if such person knows or reasonably should have known that the intent was to avoid the notice requirements of sections 213 to 223E, inclusive;

(3) engage in a fraudulent act or practice in connection with a transaction relating to a settlement involving an owner who is a resident of the commonwealth;

(4) issue, solicit or market the purchase of a new policy for the purpose of or with a significant emphasis on settling the policy;

(5) if providing premium financing, receive any proceeds, fees or other consideration from the policy or owner of the policy that are in addition to the amounts required to pay principal, interest and any reasonable costs or expenses incurred by the lender or borrower in connection with the premium finance agreement, except in the event of a default, unless either the default on the loan or transfer of the policy occurs pursuant to an agreement or understanding with another person for the purpose of evading regulation under sections 213 to 223E, inclusive;

(6) with respect to any life settlement contract or insurance policy and a life settlement broker, knowingly solicit an offer from, effectuate a life settlement contract with or make a sale to a life settlement provider, financing entity or related provider trust that is controlling, controlled by or under common control with such life settlement broker unless the relationship is disclosed to the owner;

(7) with respect to a life settlement contract or insurance policy and a life settlement provider, knowingly enter into a life settlement contract with an owner if, in connection with the life settlement contract, anything of value will be paid to a life settlement broker that is controlling, controlled by or under common control with the life settlement provider, the financing entity or a related provider trust that is involved in the life settlement contract unless the relationship is disclosed to the owner;

(8) create a trust that gives the appearance of insurable interest and is used to initiate policies for investors;

(9) include any reference in an advertisement that would cause an owner to reasonably believe that the insurance is free for any period of time; or

(10) with respect to a life insurance producer, insurance company, life settlement broker or life settlement provider, make a statement or representation to the applicant or policyholder in connection with the sale or financing of a policy to the effect that the policy is free or without cost to the policyholder for any period of time unless provided in the policy.

(d) The commissioner may investigate suspected fraudulent life settlement acts and persons engaged in the business of life settlements.