Illinois Administrative Code › Title 50 - INSURANCE › Part 3701 - VIATICAL SETTLEMENT PROVIDER AND BROKER REQUIREMENTS › Section 3701.20 - Definitions

Current through Register Vol. 48, No. 28, July 12, 2024
"Act" means the Viatical Settlements Act of 2009 [ 215 ILCS 159
				].
"Code means the Illinois Insurance Code [ 215 ILCS 5 ].
"Department" means the Illinois Department of Insurance.
"Director" means the Director of the Illinois Department of
				Insurance.
"Insured" means the person covered under the policy being
				considered for viatication.
"Life Expectancy" means the mean of the number of months the
				individual insured under the life insurance policy to be viaticated can be
				expected to live as determined by the viatical settlement provider, considering
				medical records and appropriate experiential data.
"Net Death Benefit" means the amount of the life insurance
				policy or certificate to be viaticated less any outstanding debts or
				liens.
"Patient Identifying Information" means an insured's address,
				telephone number, facsimile number, electronic mail address, photograph or
				likeness, employer, employment status, social security number, or any other
				information that is likely to lead to the identification of the insured.
"SERFF" means the System for Electronic Rate and Form Filing
				used for electronic filings of participating company policy forms and rating
				information.
"Viatical settlement broker" means
a licensed insurance
				producer who has been issued a license pursuant to Section 500-35(a)(1) or
				500-35(a)(2) of the Insurance Code, who, working exclusively on behalf of a
				viator and for a fee, commission, or other valuable consideration, offers,
				solicits, promotes, or attempts to negotiate viatical settlement contracts
				between a viator and one or more viatical settlement providers or one or more
				viatical settlement brokers.
"Viatical settlement broker" does not include an
				attorney, certified public accountant, or a 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.
[
				215 ILCS 159/5
				]
"Viatical settlement contract" means
any of the
				following:
A written agreement between a viator and a viatical
				settlement provider establishing the terms under which compensation or anything
				of value is or will be paid, which compensation or value is less than the
				expected death benefits of the policy, in return for the viator's present or
				future assignment, transfer, sale, devise, or bequest of the death benefit or
				ownership of any portion of the insurance policy.
A written agreement for a loan or other lending
				transaction, secured primarily by an individual life insurance policy or an
				individual certificate of a group life insurance policy.
The transfer for compensation or value of ownership of
				a beneficial interest in a trust or other entity that owns such policy, if the
				trust or other entity was formed or availed of for the principal purpose of
				acquiring one or more life insurance contracts and the life insurance contract
				insures the life of a person residing in this State.
A premium finance loan made for a life insurance policy
				by a lender to a viator on, before, or after the date of issuance of the policy
				in either of the following situations:
The viator or the insured receives a guarantee of the
				viatical settlement value of the policy.
The viator or the insured agrees to sell the policy or
				any portion of the policy's death benefit on any date before or after issuance
				of the policy.
"Viatical settlement contract" does not include any of
				the following acts, practices, or arrangements listed in this definition,
				unless part of a plan, scheme, device, or artifice to avoid application of the
				Act; provided, however, that the list of excluded items contained in
this definition
is not intended to be an exhaustive list and that an
				act, practice, or arrangement that is not described in
this definition
does not necessarily constitute a viatical settlement
				contract:
A policy loan or accelerated death benefit made by the
				insurer pursuant to the policy's terms;
Loan proceeds that are used solely to
				pay:
premiums for the policy; and
the costs of the loan, including, without limitation,
				interest, arrangement fees, utilization fees and similar fees, closing costs,
				legal fees and expenses, trustee fees and expenses, and third party collateral
				provider fees and expenses, including fees payable to letter of credit
				issuers;
A loan made by a bank or other financial institution in
				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 such a policy by the lender, provided that neither
				the default itself nor the transfer of the policy in connection with the
				default is pursuant to an agreement or understanding with any other person for
				the purpose of evading regulation under
the
Act
;
A loan made by a lender that does not violate Article
				XXXIIa of the Illinois Insurance Code, provided that the premium finance loan
				is not described in
the
Act
;
An agreement in which 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 trusts established primarily for the benefit of such
				parties;
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;
A bona fide business succession planning
				arrangement:
between 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;
between 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
between 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;
An agreement entered into by a service recipient, or a
				trust established by the service recipient, and a service provider, or a trust
				established by the service provider who performs significant services for the
				service recipient's trade or business; or
Any other contract, transaction, or arrangement
				exempted from the definition of viatical settlement contract by the Director
				based on the Director's determination that the contract, transaction, or
				arrangement is not of the type intended to be regulated by
the
Act.
[
				215 ILCS 159/5
				]
"Viatical settlement provider" means
a person, other
				than a viator, who enters into or effectuates a viatical settlement contract
				with a viator. "Viatical settlement provider" does not include:
a bank, savings bank, savings and loan association,
				credit union, or other financial institution that takes an assignment of a
				policy as collateral for a loan;
a financial institution or premium finance company
				making premium finance loans and exempted by the Director from the licensing
				requirement under the premium finance laws where the institution or company
				takes an assignment of a life insurance policy solely as collateral for a
				premium finance loan;
the issuer of the life insurance
				policy;
an authorized or eligible insurer that provides stop
				loss coverage or financial guaranty insurance to a viatical settlement
				provider, purchaser, financing entity, special purpose entity, or related
				provider trust;
An individual person who enters into or effectuates no
				more than one viatical settlement contract in a calendar year for the transfer
				of policies for any value less than the expected death benefit;
a financing entity;
a special purpose entity;
a related provider trust;
a viatical settlement purchaser; or
any other person that the Director determines is
				consistent with the definition of viatical settlement provider.
[
				215 ILCS 159/5
				]
"Viator" means 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
the
Act, a
				viator is not 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.
"Viator" does not include:
a licensee;
a qualified institutional buyer;
a financing entity;
a special purpose entity; or
a related provider trust.
[
				215 ILCS 159/5
				]