Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 71 - RULES GOVERNING VIATICAL SETTLEMENT PROVIDERS AND VIATICAL SETTLEMENT BROKERS › Section 14VAC5-71-20 - Definitions

Current through Register Vol. 40, No. 24, July 15, 2024
The following words and terms when used in this chapter shall
				  have the following meanings unless the context clearly indicates
				  otherwise:
"Chronically ill" means
(i) being unable to perform at least two
				activities of daily living, which shall include eating, toileting,
				transferring, bathing, dressing or continence,
(ii) requiring substantial supervision by
				another person to protect the individual from threats to health and safety due
				to severe cognitive impairment, or
(iii) having a level of disability similar to
				that described in clause (i) as determined by the U.S. Secretary of Health and
				Human Resources as required by § 38.2-6000 of the Code of Virginia.
"Commission" means the Virginia State Corporation
				  Commission.
"Insured" means the person covered under the life insurance
				  policy or certificate being considered for viatication.
"Legal entity" means an entity, other than a natural person,
				  that can function legally, sue or be sued, and make decisions through agents,
				  as in the case of a corporation. Legal entity includes a partnership, limited
				  partnership, limited liability company, corporation, or other legally
				  functioning business entities, other than a sole proprietorship.
"Licensee under this chapter" means a person licensed by the
				  commission as a viatical settlement provider or viatical settlement broker, as
				  may be reasonably construed from the content in which the term appears.
"Life expectancy" means the number of months the individual
				  insured under the life insurance policy or certificate to be viaticated can be
				  expected to live as determined by the viatical settlement provider considering
				  medical records and appropriate experiential data.
"NAIC" means the National Association of Insurance
				  Commissioners.
"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.
"Policy" means an individual or group policy, group
				  certificate, contract or arrangement of life insurance affecting the rights of
				  a resident of this Commonwealth or bearing a reasonable relation to this
				  Commonwealth, regardless of whether delivered or issued for delivery in this
				  Commonwealth.
"Terminally ill" means having an illness or sickness that can
				  reasonably be expected to result in death in 24 months or less.
"Viatical settlement broker" means a person licensed in
				  Virginia pursuant to § 38.2-1865.1 of the Code of Virginia, that on behalf
				  of another and for a fee, commission or other valuable consideration,
				  introduces viators to viatical settlement providers, or offers or attempts to
				  negotiate viatical settlement contracts between a viator and one or more
				  viatical settlement providers. A viatical settlement broker may act as agent
				  for a viatical settlement provider or on behalf of the viator, provided that a
				  viatical settlement broker shall not be deemed to act exclusively for the
				  viator unless, pursuant to written agreement between the parties, the viatical
				  settlement broker agrees (i) to disclose fully all interests in the viatical
				  settlement contract and relationships with the viatical settlement provider
				  including its affiliates and appointed or contracted agents, and (ii) that
				  compensation for services as a viatical settlement broker shall be paid
				  directly and only by the viator. The term 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 viatical settlement purchaser.
"Viatical settlement contract" means a written agreement
				  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. A viatical
				  settlement contract also includes a contract for a loan or other financing
				  transaction with a viator 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
				  the policy. A viatical settlement contract includes an agreement with a viator
				  to transfer ownership or change the beneficiary designation at a later date
				  regardless of the date that compensation is paid to the viator. Viatical
				  settlement contracts do not include accelerated death benefit provisions
				  governed by 14VAC5-70, contained in life insurance policies, whether issued
				  with the original policy or as a rider.
"Viatical settlement provider" means a person, other than the
				  viator, that enters into or effectuates a viatical settlement contract.
				  Viatical settlement provider does not include:
(i) a bank, 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;
(ii) the issuer of a life insurance policy
				providing accelerated death benefits governed by 14VAC5-70 and pursuant to the
				contract;
(iii) an authorized or
				eligible insurer that provides stop loss coverage to a viatical settlement
				provider, viatical settlement purchaser, financing entity, special purpose
				entity or related provider trust;
(iv) 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;
(v) a financing entity;
(vi) a special purpose entity;
(vii) a related provider trust;
(viii) a viatical settlement purchaser; or
(ix) an accredited investor or
				qualified institutional buyer as described in Securities and Exchange
				Commission (SEC) Regulation D (
				17 CFR
				230.501 through
				17 CFR
				230.508 ) and defined, respectively, in Rule
				501 ( 17 CFR
				230.501 ) and Rule 144A (
				17 CFR
				230.144A ) under the Securities Act of 1933,
				as amended, and who purchases a viaticated policy from a viatical settlement
				provider and does not communicate with the viator or insured who is a resident
				of this Commonwealth except through a licensee under this chapter.
"Viatical settlement purchaser" means 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 or 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 that has been or will
				  be the subject of a viatical settlement contract, for the purpose of deriving
				  an economic benefit. Viatical settlement purchaser does not include (i) a
				  licensee under this chapter; (ii) an accredited investor or qualified
				  institutional buyer as described in Regulation D (
				  17 CFR
				  230.501 through
				  17 CFR
				  230.508 ) and defined, respectively, in Rule
				  501 ( 17 CFR
				  230.501 ) and Rule 144A (
				  17 CFR
				  230.144A ) under the Securities Act of 1933,
				  as amended; (iii) a financing entity; (iv) a special purpose entity; or (v) a
				  related provider trust.
"Viaticated policy" means a life insurance policy, including
				  a certificate of life insurance issued under a group life insurance policy,
				  that has been acquired by a viatical settlement provider pursuant to a viatical
				  settlement contract.
"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 this chapter and the
				  application of Article 6.1 (§ 38.2-1865.1 et seq.) of Chapter 18 of Title
				  38.2 of the Code of Virginia, 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 except where
				  specifically addressed. Viator does not include (i) a licensee under this
				  chapter; (ii) an accredited investor or qualified institutional buyer as
				  described in Regulation D ( 17 CFR 230.501 through
				  17 CFR
				  230.508 ) and defined, respectively, in Rule
				  501 ( 17 CFR
				  230.501 ) and Rule 144A (
				  17 CFR
				  230.144A ) under the Securities Act of 1933,
				  as amended; (iii) a financing entity; (iv) a special purpose entity; or (v) a
				  related provider trust.