508E.2 Definitions. As used in this chapter, unless the context otherwise requires:1. 'Advertising' 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, andvideos, published, disseminated, circulated, or placed directly before the public in this state,for the purpose of creating an interest in or inducing a person to sell, assign, devise, bequest,or transfer the death benefit or ownership of a life insurance policy pursuant to a viaticalsettlement contract. 2. 'Business of viatical settlements' means an activity involved in but not limited to the offering, soliciting, negotiating, procuring, effectuating, purchasing, investing, financing,monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothecating,or in any other manner acquiring an interest in a life insurance policy by means of a viaticalsettlement contract. 3. 'Chronically ill' means any of the following:a. Being unable to perform or maintain at least two activities of daily living, including but not limited to by means of a viaticalsettlement contract. 3. 'Chronically ill' means any of the following:a. Being unable to perform or maintain at least two activities of daily living, including but not limited to eating, toileting, transferring, bathing, dressing, or continence. b. Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment. c. Having a level of disability similar to that described in paragraph 'a' as determined by the United States secretary of health and human services. 4. 'Commissioner' means the commissioner of insurance.5. a. 'Financing entity' means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a viatical settlement provider, creditenhancer, or any entity that has a direct ownership in a policy or certificate that is the subjectof a viatical settlement contract, but subject to all of the following: (1) Whose principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more viaticated policies. ract, but subject to all of the following: (1) Whose principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more viaticated policies. (2) Who has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts. b. 'Financing entity' does not include a nonaccredited investor or a viatical settlement purchaser. 6. 'Fraudulent viatical settlement act' includes any of the following:a. An act or omission committed by any person who, knowingly or with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits or permitsits employees or its agents to engage in acts including any of the following: (1) Presenting, causing to be presented, or preparing with knowledge or belief that it will be presented to or by a viatical settlement provider, viatical settlement broker, viaticalsettlement purchaser, financing entity, insurer, insurance producer, or any other person,false material information, or concealing material information, as part of, in support of, orconcerning a fact material to one or more of the entity, insurer, insurance producer, or any other person,false material information, or concealing material information, as part of, in support of, orconcerning a fact material to one or more of the following: (a) An application for the issuance of a viatical settlement contract or insurance policy.(b) The underwriting of a viatical settlement contract or insurance policy.(c) A claim for payment or benefit pursuant to a viatical 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 viatical settlement contract or insurance policy. (f) The reinstatement or conversion of an insurance policy.(g) In the solicitation, offer, effectuation, or sale of a viatical settlement contract or insurance policy. (h) The issuance of written evidence of viatical settlement contract or insurance policy.(i) A financing transaction.(2) Employing any plan, financial structure, device, scheme, or artifice to defraud related to viaticated policies. Sat Dec 23 00:41:22 2023 Iowa Code 2024, Section 508E.2 (17, 0) §508E.2, VIATICAL SETTLEMENT CONTRACTS 2 (3) Entering into any practice or heme, or artifice to defraud related to viaticated policies. Sat Dec 23 00:41:22 2023 Iowa Code 2024, Section 508E.2 (17, 0) §508E.2, VIATICAL SETTLEMENT CONTRACTS 2 (3) Entering into any practice or plan which involves stranger-originated life insurance.(4) Failing to disclose to the insurer when requested by the insurer that the prospective insured has undergone a life expectancy evaluation by any person or entity other than theinsurer or its authorized representative in connection with the issuance of the policy. b. In the furtherance of a fraud or to prevent the detection of a fraud to do, or permit an employee or agent to do, any of the following: (1) Remove, conceal, alter, destroy, or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of viatical settlements. (2) Misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person. (3) Transact the business of viatical settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of viaticalsettlements. Transact the business of viatical settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of viaticalsettlements. (4) File with the commissioner or the equivalent chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealinformation about a material fact from the commissioner. c. Embezzlement, theft, misappropriation, or conversion of moneys, funds, premiums, credits, or other property of a viatical settlement provider, insurer, insured, viator, insurancepolicyowner, or any other person engaged in the business of viatical settlements or insurance. d. Recklessly entering into, negotiating, brokering, or otherwise dealing in a viatical settlement contract, the subject of which is a life insurance policy that was obtained bypresenting false information concerning any fact material to the policy or by concealing,for the purpose of misleading another, information concerning any fact material to thepolicy, where the person or the persons intended to defraud the policy’s issuer, the viaticalsettlement provider, or the viator. of misleading another, information concerning any fact material to thepolicy, where the person or the persons intended to defraud the policy’s issuer, the viaticalsettlement provider, or the viator. As used in this paragraph, 'recklessly' means engagingin the conduct in conscious and clearly unjustifiable disregard of a substantial likelihood ofthe existence of the relevant facts or risks, such disregard involving a gross deviation fromacceptable standards of conduct. e. Facilitating the change of state of ownership of a policy or certificate or the state of residency of a viator to a state or jurisdiction that does not have a law similar to this chapterfor the express purposes of evading or avoiding the provisions of this chapter. f. Attempting to commit, assisting, aiding or abetting in the commission of, or conspiracy to commit the acts or omissions specified in this subsection. 7. 'Life insurance producer' means any person licensed in this state as a resident or nonresident insurance producer who has received qualification or authority for life insurancecoverage or a life line of coverage pursuant to chapter 522B. 8. n licensed in this state as a resident or nonresident insurance producer who has received qualification or authority for life insurancecoverage or a life line of coverage pursuant to chapter 522B. 8. 'Person' means a natural person or a legal entity, including, without limitation, an individual, partnership, limited liability company, association, trust, or corporation. 9. 'Policy' means an individual or group policy, group certificate, contract, or arrangement of life insurance owned by a resident of this state, regardless of whether delivered or issuedfor delivery in this state. 10. 'Related provider trust' means a titling trust or other trust established by a licensed viatical settlement provider or a financing entity for the sole purpose of holding the ownershipor beneficial interest in purchased policies in connection with a financing transaction. Thetrust shall have a written agreement with the licensed viatical settlement provider underwhich the licensed viatical settlement provider is responsible for ensuring compliance with allstatutory and regulatory requirements and under which the trust agrees to make all recordsand files related to viatical settlement transactions provider is responsible for ensuring compliance with allstatutory and regulatory requirements and under which the trust agrees to make all recordsand files related to viatical settlement transactions available to the commissioner as if thoserecords and files were maintained directly by the licensed viatical settlement provider. 11. 'Special purpose entity' means a corporation, partnership, trust, limited liability company, or other similar entity formed solely to provide either directly or indirectly accessto institutional capital markets for or in connection with any of the following: a. For a financing entity or licensed viatical settlement provider.b. (1) In connection with a transaction in which the securities in the special purpose entity are acquired by the viator or by qualified institutional buyers as defined in 17 C.F.R. §230.144 Sat Dec 23 00:41:22 2023 Iowa Code 2024, Section 508E.2 (17, 0) promulgated by the United States securities and exchange commission under the federalSecurities Act of 1933, as amended, 15 U.S.C. §77a et seq. (2) In connection with a transaction in which the securities pay a fixed rate of return commensurate with established asset-backed he federalSecurities Act of 1933, as amended, 15 U.S.C. §77a et seq. (2) In connection with a transaction in which the securities pay a fixed rate of return commensurate with established asset-backed institutional capital markets. 12. 'Stranger-originated life insurance' means a practice or an act to initiate a life insurance policy for the benefit of a third-party investor who, at the time of policy origination,has no insurable interest in the insured. a. Stranger-originated life insurance practices include cases in which life insurance is purchased with resources or guarantees from or through a person or entity who, at the time ofthe policy inception, could not lawfully initiate the policy by the person or entity, and where,at the time of the policy’s inception, there is an arrangement or agreement, whether verbalor written, to directly or indirectly transfer the ownership of the policy or the policy benefitsto a third party. Trusts that are created to give the appearance of an insurable interest, andare used to initiate policies for investors, violate insurable interest laws and the prohibitionagainst wagering on life. b. rusts that are created to give the appearance of an insurable interest, andare used to initiate policies for investors, violate insurable interest laws and the prohibitionagainst wagering on life. b. Stranger-originated life insurance arrangements do not include those practices set forth in subsection 15, paragraph 'd'. 13. 'Terminally ill' means having an illness or sickness that can reasonably be expected to result in death in twenty-four months or less. 14. 'Viatical settlement broker' means a person, including a life insurance producer, who, working exclusively on behalf of a viator and for a fee, commission, or other valuableconsideration, offers or attempts to negotiate viatical settlement contracts between a viatorand one or more viatical settlement providers or one or more viatical settlement brokers.Notwithstanding the manner in which the viatical settlement broker is compensated, aviatical settlement broker is deemed to represent only the viator, and not the insurer or theviatical settlement provider, and owes a fiduciary duty to the viator to act according to theviator’s instructions and in the best interest of the viator. t only the viator, and not the insurer or theviatical settlement provider, and owes a fiduciary duty to the viator to act according to theviator’s instructions and in the best interest of the viator. 'Viatical settlement broker' doesnot include an attorney, certified public accountant, or a financial planner accredited bya nationally recognized accreditation agency who is retained to represent the viator andwhose compensation is not paid directly or indirectly by the viatical settlement provider orpurchaser. 15. a. 'Viatical settlement contract' means a written agreement entered into between a viator and a viatical settlement provider or any affiliate of the viatical settlement providerestablishing 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 returnfor the viator’s present or future assignment, transfer, sale, devise, or bequest of the deathbenefit or ownership of any portion of the insurance policy or certificate of insurance. b. 'Viatical settlement contract' includes a premium finance loan made for a life insurance policy by a lender to a viator on, before, or portion of the insurance policy or certificate of insurance. b. 'Viatical settlement contract' includes 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 where anyof the following applies: (1) The viator or the insured receives on the date of the premium finance loan a guarantee of a future viatical settlement value of the policy. (2) The viator or the insured agrees on the date of the premium finance loan to sell the policy or any portion of its death benefit on any date following the issuance of the policy. c. 'Viatical settlement contract' also includes the transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns a life insurance policy ifthe trust or other entity was formed or availed of for the principal purpose of acquiring one ormore life insurance policies, which life insurance policy insures the life of a person residingin this state. d. 'Viatical settlement contract' does not include any of the following:(1) A policy loan or accelerated death benefit made by the insurer pursuant to the policy’s terms. erson residingin this state. d. 'Viatical settlement contract' does not include any of the following:(1) A policy loan or accelerated death benefit made by the insurer pursuant to the policy’s terms. (2) Loan proceeds that are used solely to pay any of the following:(a) Premiums for the policy.(b) 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 Sat Dec 23 00:41:22 2023 Iowa Code 2024, Section 508E.2 (17, 0) §508E.2, VIATICAL SETTLEMENT CONTRACTS 4 expenses, and third-party collateral provider fees and expenses, including fees payable toletter of credit issuers. (3) A loan made by a bank or other licensed 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 defaulton the loan and the policy is transferred, the transfer of such a policy by the lender, providedthat neither the default itself nor the transfer of the policy in connection with such default ispursuant to an agreement or understanding with any other person for the purpose of evadingregulation under this her the default itself nor the transfer of the policy in connection with such default ispursuant to an agreement or understanding with any other person for the purpose of evadingregulation under this chapter. (4) A loan made by a lender that does not violate insurance premium finance law, provided that the premium finance loan is not described in paragraph 'b'. (5) An agreement where all the parties are closely related to the insured by blood or law; have a lawful substantial economic interest in the continued life, health, and bodily safety ofthe person insured; or are trusts established primarily for the benefit of such parties. (6) 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 theemployer, of life insurance on the life of the employee. (7) A bona fide business succession planning arrangement between one or more of the following: (a) Shareholders in a corporation or between a corporation and one or more of its shareholders or one or more trusts established by its shareholders. arrangement between one or more of the following: (a) Shareholders in a corporation or between a corporation and one or more of its shareholders or one or more trusts established by its shareholders. (b) Partners in a partnership or between a partnership and one or more of its partners or one or more trusts established by its partners. (c) 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. (8) 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 performssignificant services for the service recipient’s trade or business. (9) Any other contract, transaction, or arrangement exempted from the definition of viatical settlement contract by the commissioner based on a determination that the contract,transaction, or arrangement is not of the type intended to be regulated by this chapter. 16. a. 'Viatical settlement provider' means a person, other than a viator, that enters into or effectuates a viatical settlement contract with a viator resident in this state. b. ted by this chapter. 16. a. 'Viatical settlement provider' means a person, other than a viator, that enters into or effectuates a viatical settlement contract with a viator resident in this state. b. 'Viatical settlement provider' does not include any of the following:(1) A bank, savings bank, savings and loan association, credit union, or other licensed lending institution that takes an assignment of a life insurance policy solely as collateral fora loan. (2) The issuer of the life insurance policy.(3) 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. (4) 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 expecteddeath benefit. (5) A financing entity.(6) A special purpose entity.(7) A related provider trust.(8) A viatical settlement purchaser.(9) Any other person that the commissioner determines is not the type of person intended to be covered by the definition of viatical settlement provider. 17. a. st.(8) A viatical settlement purchaser.(9) Any other person that the commissioner determines is not the type of person intended to be covered by the definition of viatical settlement provider. 17. a. 'Viatical settlement purchaser' means a person who provides a sum of money as consideration for a life insurance policy or an interest in the death benefits of a life insurancepolicy, or a person who owns or acquires or is entitled to a beneficial interest in a trust thatowns a viatical settlement contract or is the beneficiary of a life insurance policy that hasbeen or will be the subject of a viatical settlement contract, for the purpose of deriving aneconomic benefit. b. 'Viatical settlement purchaser' does not include any of the following: Sat Dec 23 00:41:22 2023 Iowa Code 2024, Section 508E.2 (17, 0) (1) A licensee under this chapter.(2) An accredited investor or qualified institutional buyer as defined, respectively, in 17 C.F.R. §230.501(a) or 17 C.F.R. §230.144A as promulgated by the United States securities andexchange commission under the federal Securities Act of 1933, as amended, 15 U.S.C. §77aet seq. vely, in 17 C.F.R. §230.501(a) or 17 C.F.R. §230.144A as promulgated by the United States securities andexchange commission under the federal Securities Act of 1933, as amended, 15 U.S.C. §77aet seq. (3) A financing entity.(4) A special purpose entity.(5) A related provider trust.18. 'Viaticated policy' means a life insurance policy or certificate that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract. 19. a. 'Viator' means the owner of a life insurance policy or a certificate holder under a group policy who resides in this state and enters or seeks to enter into a viatical settlementcontract. 'Viator' includes but is not limited to an owner of a life insurance policy or acertificate holder under a group policy insuring the life of an individual with a terminal orchronic illness or condition except where specifically addressed. If there is more than oneviator on a single policy and the viators are residents of different states, the transactionshall be governed by the law of the state in which the viator having the largest percentageownership resides or, if the viators hold equal ownership, the state of residence of one viatoragreed upon onshall be governed by the law of the state in which the viator having the largest percentageownership resides or, if the viators hold equal ownership, the state of residence of one viatoragreed upon in writing by all the viators. b. 'Viator' does not include any of the following:(1) A licensee under this chapter, including a life insurance producer acting as a viatical settlement broker pursuant to this chapter. (2) A qualified institutional buyer as defined in 17 C.F.R. §230.144-144A as promulgated by the United States securities and exchange commission under the federal Securities Act of1933, as amended, 15 U.S.C. §77a et seq. (3) A financing entity.(4) A special purpose entity.(5) A related provider trust.2000 Acts, ch 1147, §36; 2008 Acts, ch 1155, §2; 2021 Acts, ch 181, §6Referred to in §508E.12 Sat Dec 23 00:41:22 2023 Iowa Code 2024, Section 508E.2 (17, 0)
Iowa Legal Code