2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 508E - VIATICAL SETTLEMENT CONTRACTS
508E.2 - DEFINITIONS.

        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,
      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 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, 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 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 permits its 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, 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:
         (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.
         (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 the insurer 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 viatical
      settlements.
         (4)  File with the commissioner or the equivalent chief insurance
      regulatory official of another jurisdiction a document containing
      false information or otherwise conceal information 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, insurance policyowner,
      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 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.  As used in this paragraph,
      "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.  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 chapter for 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 insurance coverage 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 issued for
      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 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.
         11.  "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 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 promulgated by the United States securities and exchange
      commission under the federal Securities 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 of the 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 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 an insurable interest, and are used to initiate
      policies for investors, violate insurable interest laws and the
      prohibition against 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 as provided for in section 508E.3, 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.  "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.
         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 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.
         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 any of 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 if the trust
      or other entity was formed or availed of for the principal purpose of
      acquiring one or more life insurance policies, which life insurance
      policy insures the life of a person residing in 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 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 itself nor the transfer
      of the policy in connection with such default is pursuant to an
      agreement or understanding with any other person for the purpose of
      evading regulation 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 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 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 performs significant
      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.  "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 for a 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 expected death 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.  "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.
         b.  "Viatical settlement purchaser" does not include any of
      the following:
         (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 and exchange
      commission under the federal Securities Act of 1933, as amended, 15
      U.S.C. § 77a et 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 settlement contract.
      "Viator" includes but 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.  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.
         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 of 1933, 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
         Referred to in § 508E.12