2023 New York Laws › ISC - Insurance › Article 78 - Life Settlements › 7802 - Definitions.

§ 7802. Definitions. In this article:
(a)  "Accredited  investors" shall be as defined in regulation D, rule
501 of the Federal Securities Act of 1933, as amended.
(b)  "Advertisement"  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  before  the  public,
directly or indirectly, for the purpose of creating an  interest  in  or
inducing a person to purchase, sell, assign, devise, bequest or transfer
the  death  benefit  or  ownership  of,  a  life  insurance policy or an
interest in a life  insurance  policy  pursuant  to  a  life  settlement
contract.
(c)(1) "Business of life settlements" means an activity involving, but
not  limited  to,  offering  to  enter  into,  soliciting,  negotiating,
procuring,  effectuating,  monitoring,  or  tracking   life   settlement
contracts.
(2) For purposes of this article, "business of life settlements" shall
also include:
(A)  such  acts  or  transactions effectuated in this state by mail or
otherwise from outside this state; and
(B) doing or proposing to do any business in substance  equivalent  to
the  business  of  life  settlements  in  a manner designed to evade the
provisions of this chapter.
(d) "Compensation" means anything of value, including money,  credits,
loans,  interest  on  premium,  forgiveness  of  principal  or interest,
vacations,  prizes,  gifts  or  the  payment  of  employee  salaries  or
expenses, whether paid as commission or otherwise.
(e) "Financing entity" means an accredited investor:
(1)  whose  principal  activity  in connection with the transaction is
providing funds to effect the life settlement contract  or  to  purchase
one or more policies; and
(2) who has an agreement in writing with a life settlement provider to
finance the acquisition of a life settlement contract.
(f)  "Financing  transaction"  means a transaction in which a licensed
life settlement provider obtains  financing  from  a  financing  entity,
including   any  secured  or  unsecured  financing,  any  securitization
transaction, or any securities offering which is  registered  or  exempt
from registration under federal and state securities laws.
(g)  "Insured" means a person covered under a policy that is or may be
the subject of a life settlement contract.
(h) "Insurer" means a life insurance company or  a  fraternal  benefit
society.
(i)  "Life  expectancy"  means  the  arithmetic  mean of the number of
months the insured can be expected to  live  taking  into  consideration
medical records and appropriate experiential data.
(j)  "Life  settlement  broker"  means a person who, for compensation,
solicits, negotiates or offers to negotiate a life settlement  contract;
except  that  such  term  shall  not  include a licensed life settlement
provider, or representative thereof, licensed attorney at law, certified
public  accountant,  or  financial  planner  that  is  accredited  by  a
nationally   recognized   accreditation   agency   acceptable   to   the
superintendent, who is retained in his  or  her  professional  capacity,
does  not  advertise as being in the business of life settlements and is
compensated without regard to whether  a  life  settlement  contract  is
effectuated.
(k)(1)  "Life settlement contract" means an agreement establishing the
terms  under  which  compensation  is  provided  to  an   owner,   which

compensation  is  less than the expected death benefit of the policy, in
return for the assignment, transfer, sale, release, devise or bequest of
any portion of:
(A) the death benefit;
(B) the ownership of the policy; or
(C)  any beneficial interest in the policy, or in a trust or any other
entity that owns the policy, where a primary purpose of the  transaction
is to acquire the policy.
(2)  "Life  settlement  contract"  shall include an agreement, entered
into after the effective date of this article,  described  in  paragraph
one  of  this  subsection  regardless  of  the  date the compensation is
provided and regardless of the  date  the  assignment,  transfer,  sale,
devise or bequest is effectuated.
(3) "Life settlement contract" shall not include:
(A)  an  assignment  of  a  policy  as  collateral  for  a loan by any
depository  institution  insured  by  the  Federal   Deposit   Insurance
Corporation or the National Credit Union Administration;
(B)  an  assignment  of  a  policy  as collateral for a loan made by a
licensed financial institution under which the lender takes an  interest
in  a  life insurance policy solely to secure repayment of a loan or, if
there is a default on the  loan  and  the  policy  is  transferred,  the
transfer  of  the policy by the lender, provided that the default itself
is not pursuant to an agreement or understanding with any  other  person
for the purpose of evading regulation under this article;
(C)  an  assignment  of  a  policy  as collateral for a loan made by a
lender that does not violate article twelve-B of the banking law;
(D) the making of a policy loan, or the paying of  surrender  benefits
or  other  benefits,  by  the  issuer  of  a policy with respect to that
policy;
(E) an exchange of life insurance policies in a transaction  described
by section 1035 of the Internal Revenue Code of 1986, as amended;
(F)  an  agreement  made  by  an  individual  to  take  an assignment,
purchase, or otherwise receive the death benefit  or  ownership  of  any
portion of a policy or policies on the life of a single insured or lives
of  joint  insureds;  provided  that, in a calendar year, the individual
enters into no other agreement  to  take  an  assignment,  purchase,  or
otherwise  receive  the  death  benefit or ownership of any portion of a
policy or policies on the life of any other  insured  or  lives  of  any
other joint insureds;
(G)  an  agreement  to assign, transfer or pledge a settled policy, or
any interest  therein,  to  a  licensed  life  settlement  provider,  an
accredited  investor or qualified institutional buyer, financing entity,
special purpose entity, or related provider trust;
(H) an agreement where all the parties  are  closely  related  to  the
insured  by  blood or law or have a lawful substantial economic interest
in the continued life, health and bodily safety of the  person  insured,
or are trusts established primarily for the benefit of such parties;
(I)  any  designation,  consent  or  agreement by an insured who is an
employee of an employer in connection with the purchase by the employer,
or trust established by the employer, of life insurance on the  life  of
the employee;
(J) a bona fide business succession planning arrangement between:
(i) one or more shareholders in a corporation or between a corporation
and one or more of its shareholders or one or more trusts established by
its shareholders;
(ii)  one  or  more partners in a partnership or between a partnership
and one or more of its partners or one or more trusts established by its
partners; or
(iii) one or more members in a limited liability company or between  a
limited  liability company and one or more of its members or one or more
trusts established by its members;
(K)  legitimate  corporate  or pension benefit plans, as determined by
the superintendent; or
(L)  any  other  agreement  that  the  superintendent  determines   is
substantially similar to any of the foregoing.
(l)  "Life  settlement  intermediary"  means a person who maintains an
electronic or other facility or system, for the  disclosure,  through  a
forum of offers and counteroffers, to sell or purchase a policy pursuant
to a life settlement contract; and delivers to:
(1)  a life settlement provider an offer from a life settlement broker
or owner to sell a policy; or
(2) an owner or life settlement broker an offer from a life settlement
provider to purchase a policy.
(m) "Life settlement provider" means a person who enters, or offers to
enter, into a life settlement contract with the owner.
(n) "Owner" means the owner of a policy who enters or seeks  to  enter
into a life settlement contract.
(o)  "Person"  means  any  natural person or legal entity, including a
partnership,  limited   liability   company,   association,   trust   or
corporation.
(p)  "Policy"  means  an  individual or group life insurance policy or
certificate.
(q) "Premium finance loan" means a  loan  made  for  the  purposes  of
making  premium  payments  on  a  life  insurance  policy, which loan is
secured by an interest in such life insurance policy.
(r) "Qualified institutional buyer" shall be as defined in  rule  144A
of the Federal Securities Act of 1933, as amended.
(s)  "Related  provider trust" means a trust established by a licensed
life settlement provider or a financing entity for the sole  purpose  of
holding  the  ownership  or  beneficial  interest in settled policies in
connection with a financing transaction; provided that the trust  has  a
written  agreement  with  the  licensed  life  settlement provider under
which:
(1) the licensed life settlement provider is responsible for  ensuring
compliance with all statutory and regulatory requirements; and
(2)  the  trust  agrees to make all records and files relating to life
settlement transactions available to  the  superintendent  as  if  those
records  and  files  were  maintained  directly  by  the  licensed  life
settlement provider.
(t) "Settled policy" means a policy that at any time has been acquired
by a life settlement provider pursuant to a life settlement contract.
(u) "Special purpose entity" means a corporation, partnership,  trust,
limited  liability  company,  or  other  legal  entity  formed solely to
provide, either directly or indirectly, access to institutional  capital
markets for a financing entity or licensed life settlement provider.