General Laws

Section 213. As used in sections 212 to 223, inclusive, the following words shall, unless the context requires otherwise have the following meanings:—

“Accelerated benefits”, a policy provision allowing full or partial payment of the death benefit before the death of the insured based on the physical condition of the insured.

“Catastrophic condition”, a medical condition reasonably expected to result in death within 36 months, whether or not medical treatment is provided, where such condition has been certified to by a physician, including, but not limited to, metastasized cancers, renal failure in persons not candidates for transplants, heart or lung disease in persons not candidates for transplants and Acquired Immune Deficiency Syndrome.

“Commissioner”, the commissioner of insurance.

“Financing entity”, a person who is (1) an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a viatical settlement provider or viatical loan provider, credit enhancer, reinsurer, or who may be a party to a viatical settlement or a viatical loan, (2) who has a direct ownership or security interest in any policy or certificate which is the subject of a viatical settlement contract or viatical loan contract, but (3) whose sole activity related to the transaction is providing funds to effect the viatical settlement or viatical loan and (4) who has an agreement in writing with a duly licensed viatical settlement provider or viatical loan provider to act as a participant in a financing transaction.

“Financing transaction”, a transaction in compliance with federal and state securities laws in which a duly licensed viatical settlement provider or viatical loan provider or financing entity obtains financing for viatical settlement contracts, viatical loan contracts, viaticated policies or interests therein including, without limitation, any secured or unsecured financing, any securitization transaction or any securities offering, either registered or exempt from registration under federal and state securities law.

“Insured”, an individual who is the subject of a life insurance policy or group life insurance contract. For the purposes of sections 212 to 223, inclusive it is the insured’s privacy which shall be protected, regardless of whether the insured is also the policy owner or certificate holder.

“Person”, a natural or artificial entity, including but not limited to, individuals, partnerships, associations, trusts or corporations.

“Viatical loan borrower”, the owner of a life insurance policy or the certificate holder under a group life insurance contract insuring the life of a person with a catastrophic, life-threatening or chronic illness or condition who enters into a viatical loan contract with a viatical loan provider.

“Viatical loan broker”, a person that, on behalf of a viatical loan borrower and for a fee, commission or other valuable consideration, offers or attempts to negotiate viatical loan contracts between a viatical loan borrower and one or more viatical loan providers. Irrespective of the manner in which the viatical loan broker is compensated, a viatical loan broker is deemed to represent only the viatical loan borrower and owes a fiduciary duty to the viatical loan borrower to act according to the borrower’s instructions and in the best interest of the borrower. A viatical loan broker does not include an attorney, accountant or financial planner retained to represent the borrower and whose compensation is paid directly by or at the direction of the borrower regardless of whether the viatical loan is completed.

“Viatical loan contract”, a written agreement through which a person owning a life insurance policy or who owns or is covered under a group policy insuring the life of a person who has a catastrophic, life- threatening or chronic illness or condition secures a loan from a viatical loan provider by using the policy as collateral. The secured loan is an amount less than the face value of the policy, with the difference between the loan principal and the face value of the policy being used to pay, among other things, the accrued loan interest. Upon repayment of the viatical loan, the viatical loan provider’s collateral interest in the policy terminates and the security interest is released to the original policyholder, or his or her designee. Viatical loans do not include loans taken against the cash value of a life insurance policy for the purpose of paying premiums due.

“Viatical loan provider”, a person, other than a viatical loan borrower, that enters into a viatical loan contract. A viatical loan provider does not include:

(1) a natural person who enters into not more than one loan agreement in a calendar year for any value less than the expected death benefit;

(2) a family member or friend, who is not in the business of providing or obtaining viatical loans, who enters into a loan agreement for any value less than the expected death benefit; or

(3) a financing entity.

“Viatical loan representative”, a person who is an authorized agent of a duly licensed viatical loan provider or viatical loan broker and who acts or assists in any manner in the solicitation of a viatical loan on behalf of such viatical loan provider or viatical loan broker, as applicable. A viatical loan representative does not include:

(1) an attorney, an accountant, an investment or financial planner or any person exercising a power of attorney granted by a viatical loan borrower;

(2) a person who is retained to represent a viatical loan borrower and whose compensation is paid by or at the discretion of the viatical loan borrower regardless of whether the viatical loan transaction is completed; or

(3) a credit union, trade union, not-for-profit entity or an employer or association that makes information about viatical loans available to its employees or members unless such information is distributed in exchange for financial consideration.

A viatical loan representative is deemed to represent only the viatical loan provider or viatical loan broker, as applicable.

“Viatical settlement broker”, a person that, on behalf of a viator and for a fee, commission or other valuable consideration, offers or attempts to negotiate viatical settlements between a viator and one or more viatical settlement providers. Irrespective of the manner in which the viatical settlement broker is compensated a viatical settlement broker is deemed to represent only the viator and owes a fiduciary duty to the viator to act according to the viator’s instructions and in the best interest of the viator. A viatical settlement broker does not include an attorney, accountant or financial planner retained to represent the viator whose compensation is paid directly by or at the direction of the viator regardless of whether the viatical settlement is completed.

“Viatical settlement contract”, a written agreement entered into between a viatical settlement provider and a viator. The agreement shall establish the terms under which the viatical settlement provider will pay compensation or anything of value, 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 all or a portion of the insurance policy or certificate of insurance to the viatical settlement provider.

“Viatical settlement provider”, a person, other than a viator, who enters into a viatical settlement contract, or who obtains financing from a financing entity for the purchase, acquisition, transfer or other assignment of one or more viatical settlement contracts, viaticated policies or interests therein or who otherwise sells, assigns, transfers, pledges, hypothecates or otherwise disposes of one or more viatical settlement contracts, viaticated policies or interests therein. A viatical settlement provider does not include:

(1) a bank, savings bank, savings and loan association, credit union or other licensed lending institution which takes an assignment of a life insurance policy as collateral for a loan;

(2) the issuer of a life insurance policy providing accelerated benefits and pursuant to the contract;

(3) a natural person who enters into not more than one agreement in a calendar year for the transfer of life insurance policies for any value less than the expected death benefit;

(4) a family member or friend who is not in the business of providing or obtaining viatical settlements, who enters into a viatical settlement agreement for any value less than the expected death benefit; or

(5) a financing entity.

“Viatical settlement representative”, a person who is an authorized agent of a duly licensed viatical settlement provider or viatical settlement broker, as applicable, and who acts or assists in any manner in the solicitation of a viatical settlement on behalf of such viatical settlement provider or viatical settlement broker. A viatical settlement representative shall not include:

(1) an attorney, accountant, investment or financial planner or any person exercising a power of attorney granted by a viator;

(2) a person who is retained to represent a viator and whose compensation is paid by or at the discretion of the viator regardless of whether the viatical settlement transaction is completed; or

(3) a credit union, trade union, not-for-profit entity or an employer or association that makes information about viatical settlements available to its employees or members, unless such information is distributed in exchange for financial consideration.

A viatical settlement representative is deemed to represent only the viatical settlement provider or viatical settlement broker, as applicable.

“Viaticated policy”, a life insurance policy or certificate that has been the subject of a completed viatical settlement contract or viatical loan contract.

“Viator”, the owner of a life insurance policy or a certificate holder under a group policy insuring the life of an individual with a catastrophic, life-threatening or chronic illness or condition who enters or seeks to enter into a viatical settlement contract.