§36-4055.2. Definitions.
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/ok/title-36-insurance/36-4055-2·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
As used in the Viatical Settlements Act of 2008:
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 and videos, 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 viatical settlement 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 viatical settlement contract;
3. “Chronically ill” means:
a. being unable to perform 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, or
c. having a level of disability similar to that described
in subparagraph a of this paragraph as determined by
the Secretary of Human Services;
4. “Commissioner” means the Insurance Commissioner of the State of Oklahoma;
5. “Financing entity” means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a viatical settlement provider, credit enhancer, or any entity that has a direct ownership in a policy or certificate that is the subject of a viatical settlement contract, but:
a. whose principal activity related to the transaction is
providing funds to effect the viatical settlement or
purchase of one or more viaticated policies, and
b. who has an agreement in writing with one or more
licensed viatical settlement providers to finance the
acquisition of viatical settlement contracts.
Financing entity does not include a nonaccredited investor or a viatical settlement purchaser;
6. “Financing transaction” means a transaction in which a licensed provider obtains financing from a financing entity, including, without limitation, any secured or unsecured financing, any securitization transaction, or any securities offering which either is registered or exempt from registration under federal and state securities law;
7. “Fraudulent viatical settlement act” includes:
a. acts or omissions committed by any person who,
knowingly and with intent to defraud, for the purpose
of depriving another of property or for pecuniary
gain, commits, or permits its employees or its agents
to engage in acts including:
(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, viatical
settlement purchaser, financing entity, insurer,
insurance producer or any other person, false
material information, or concealing material
information, as part of, in support of or
concerning a fact material to one or more of the
following:
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, or
(i)a financing transaction,
(2)intentionally failing to disclose to the insurer
when requested by the insurer that the
prospective insured has knowingly undergone a
life expectancy evaluation by any person or
entity other than the insured or its authorized
representatives in connection with the issuance
of the policy,
(3)in the solicitation, application or issuance of a
life insurance policy, employing any device,
scheme or artifice in violation of Section 3604
of Title 36 of the Oklahoma Statutes, and
(4)employing any plan, financial structure, device,
scheme, or artifice to defraud related to
viaticated policies,
b. in the furtherance of a fraud or to prevent the
detection of a fraud any person commits or permits its
employees or its agents to:
(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 viatical
settlements, or
(4)file with the Commissioner or the equivalent
chief insurance regulatory official of another
jurisdiction a document containing false
information or otherwise conceals information
about a material fact from the Commissioner,
c. embezzlement, theft, misappropriation or conversion of
monies, funds, premiums, credits or other property of
a viatical settlement provider, insurer, insured,
viator, insurance policyowner or any other person
engaged in the business of viatical settlements or
insurance,
d. recklessly entering into, negotiating, brokering,
otherwise dealing in a viatical settlement contract,
the subject of which is a life insurance policy that
was obtained by presenting false information
concerning any fact material to the policy or by
concealing, for the purpose of misleading another,
information concerning any fact material to the
policy, where the person or the persons intended to
defraud the policy’s issuer, the viatical settlement
provider or the viator. Recklessly means engaging in
the conduct in conscious and clearly unjustifiable
disregard of a substantial likelihood of the existence
of the relevant facts or risks, such disregard
involving a gross deviation from acceptable standards
of conduct,
e. stranger-originated life insurance,
f. 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 act for the express purposes of
evading or avoiding the provisions of the Viatical
Settlements Act of 2008, or
g. attempting to commit, assisting, aiding or abetting in
the commission of, or conspiracy to commit the acts or
omissions specified in this paragraph;
8. “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 insurance coverage or a life line of coverage pursuant to the Oklahoma Producer Licensing Act;
9. “Person” means a natural person or a legal entity, including, without limitation, an individual, partnership, limited liability company, association, trust, or corporation;
10. “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 issued for delivery in this state;
11. “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 ownership or beneficial interest in purchased policies in connection with a financing transaction. The trust shall have a written agreement with the licensed viatical settlement provider under which the licensed viatical settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files related to viatical settlement transactions available to the Commissioner as if those records and files were maintained directly by the licensed viatical settlement provider;
12. “Special purpose entity” means a corporation, partnership, trust, limited liability company or other similar entity formed solely to provide either directly or indirectly access to institutional capital markets:
a. for a financing entity or licensed viatical settlement
provider, or
b.
(1)in connection with a transaction in which the
securities in the special purposes entity are
acquired by the viator or by “qualified
institutional buyers” as defined in Rule 144
promulgated under the Federal Securities Act of
1933, as amended, or
(2)the securities pay a fixed rate of return
commensurate with established asset-backed
institutional capital markets;
13. “Stranger-originated life insurance” means a practice or plan 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. Stranger-originated life insurance practices include, but are not limited to, cases in which life insurance is purchased with resources or guarantees from or through a person or entity who, at the time of policy inception, could not lawfully initiate the policy, and where, at the time of policy inception, there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy or the policy benefits to a third party.
Trusts that are created to give the appearance of insurable interest and are used to initiate policies for investors violate Section 3604 of Title 36 of the Oklahoma Statutes and the prohibition against wagering on human life. Stranger-originated life insurance
arrangements do not include the practices provided in subparagraph b of paragraph 15 of this section;
14. “Terminally ill” means having an illness or sickness that can reasonably be expected to result in death in twenty-four
(24)months or less;
15. “Viatical settlement broker” means a person, including a life insurance producer as provided for in Section 3 of Enrolled Senate Bill No. 1980 of the 2nd Session of the 51st Oklahoma Legislature, who working exclusively on behalf of a viator and for a fee, commission or other valuable consideration, offers or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers or one or more viatical settlement brokers. Notwithstanding the manner in which the viatical settlement broker is compensated, a viatical settlement broker is deemed to represent only the viator, and not the insurer or the viatical settlement provider, and owes a fiduciary duty to the viator to act according to the viator’s instructions and in the best interest of 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 purchaser;
16. “Viatical settlement contract” means a written agreement between a viator and a viatical settlement provider or any affiliate of the 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 or certificate of insurance.
Viatical settlement contract also means the transfer for compensation or value of ownership or 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, which life insurance contracts insure the life of a person residing in this state.
a. Viatical settlement contract includes a premium
finance loan made for a life insurance policy by a
lender to viator on, before or less than two
(2)years
after the date of issuance of the policy where:
(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, or
(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.
b. Viatical settlement contract does not include:
(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:
(a)premiums for the policy, and
(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 expenses, and third-party collateral
provider fees and expenses, including fees
payable to letter 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 default on
the loan and the policy is transferred, the
transfer of such a policy by the lender, provided
that neither the default on the loan 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 this act,
(4)a loan made by a lender that does not violate
Sections 4-101 through 4-304 of Title 14A of the
Oklahoma Statutes, provided that the premium
finance loan is not described in this
subparagraph,
(5)an agreement where all the parties:
(a)are closely related to the insured by blood
or law, or
(b)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,
(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 the employer, of life
insurance on the life of the employee,
(7)a bona fide business succession planning
arrangement:
(a)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
(c)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,
(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 performs significant
services for the service recipient’s trade or
business, or
(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 the Viatical Settlements Act of
2008;
17. “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. Viatical settlement provider does not include:
a. 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 for a loan,
b. a premium finance company making premium finance loans
and exempted by the Commissioner from the licensing
requirement under the premium finance laws that takes
an assignment of a life insurance policy solely as
collateral for a loan,
c. the issuer of the life insurance policy,
d. 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,
e. 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,
f. a financing entity,
g. a special purpose entity,
h.
a related provider trust,
i.
a viatical settlement purchaser, or
j.
any other person that the Commissioner determines is
not the type of person intended to be covered by the
definition of viatical settlement provider;
18. “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 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:
a. a licensee under the Viatical Settlements Act of 2008,
b. an accredited investor or qualified institutional
buyer as defined, respectively, in Rule 501(a) or Rule
144A promulgated under the Federal Securities Act of
1933, as amended,
c. a financing entity,
d. a special purpose entity, or
e. a related provider trust;
19. “Viaticated policy” means a life insurance policy or certificate that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract; and
20. “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 settlement contract. For the purposes of the Viatical Settlements Act of 2008, 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 or condition except where specifically addressed.
If there is more than one viator on a single policy and the viators are residents of different states, the transaction shall be governed by the law of the state in which the viator having the largest percentage ownership resides or, if the viators hold equal ownership, the state of residence of one viator agreed upon in writing by all the viators. Viator does not include:
a. a licensee under the Viatical Settlements Act of 2008,
including a life insurance producer acting as a
viatical settlement broker pursuant to the Viatical
Settlements Act of 2008,
b. qualified institutional buyer as defined,
respectively, in Rule 144A promulgated under the
Federal Securities Act of 1933, as amended,
c. a financing entity,
d. a special purpose entity, or
e. a related provider trust. Added by Laws 2008, c. 183, § 2, eff. Nov. 1, 2008. Amended by Laws 2008, c. 344, § 2, eff. Nov. 1, 2008.