|
Viatical Settlement
From the Latin "Viaticum" (vi-at-i-kum), historically, an allowance for traveling expenses or provisions for a journey.) n. Historically, the proceeds from the sale of a life insurance policy to a third party by a terminally ill individual.
The term today covers the sale by persons who are not terminally ill. Today the term also refers to the sale by a policy owner who may not be the insured individual. This could be a corporation or another family member.
Viatical Settlement Broker
This means a person who, on behalf of an Owner and for a fee, commission or other valuable consideration, offers or attempts to negotiate Sales Contracts, between an Owner and one or more Providers, the subject of which is a Life Settlement. A broker represents only the Owners and owes a fiduciary duty to the Owner to act according to the Owners instructions, notwithstanding the manner in which the Broker is compensated. A Broker does not include an attorney, certified public accountant or financial planner retained in the type of practice customarily performed in their professional capacity to represent the Owner whose compensation is not paid directly or indirectly by the Provider.
Viatical Settlement Provider
This means a Person, other than an Owner, who enters into or effectuates a Sales Contract with an Owner, the subject of which is a Life Settlement. A Provider does not include :
- any bank, savings bank, savings and loan association, credit union or other licensed institution which takes an assignment of a life insurance policy or certificate issued pursuant to a group life insurance policy as collateral for a loan;
- any natural Person who enters into no more than one agreement in a calendar year for the transfer of a life insurance policy, for compensation or anything of value less than the expected death benefit payable under the policy;
- a Purchaser or any authorized or eligible insurer that provides stop loss coverage to a Provider;
- a Financial Entity;
- a Special Purpose Entity;
- a Related Provider Trust;
- a Broker.
Viaticals
A general term referring to transactions in the viatical settlement marketplace.
Viaticate
(vi-at-i-kate) (Historically, to furnish with the provisions necessary for a journey.) v. To sell a life insurance policy to a third party when the insured is terminally ill.
Viator
(vi'-a-tor) n. A terminally ill person who sells his or her life insurance policy to a third party and receives a lump sum cash payment.
Accelerated Death Benefit
A feature of a life insurance policy that typically pays some or all of the policy's death benefit before the insured dies. It may provide a way to get cash from a policy without selling it to a third party.
Net Death Benefit
The amount of the life insurance policy or certificate to be viaticated less any outstanding debts or liens.
Life Expectancy
The number of months the individual insured under the life insurance policy to be viaticated can be expected to live as determined by the viatical settlement provider considering medical records and appropriate experiential data.
Terminally Ill
Having an illness or sickness that can reasonably be expected to result in death in twenty-four (24) months or less.
Chronically Ill
This means (1) being unable to perform at least two activities of daily living (i.e., eating, toileting, transferring, bathing, dressing or continence), or (2) requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment, or (3) having a level of disability similar to that described in (1) as determined by the Secretary of Health and Human Services.
Owner
This term means the Owner of a life insurance policy or a certificate holder under a group policy. The term "Owner" does not include any Provider or other licensee.
Insured
This term means the person covered under the policy being considered for viatification.
Purchase Agreement
A Contract or agreement entered into by a Provider with a Purchaser, to which the Owner is not a party, to purchase a policy or an interest in a life insurance policy, or acquire a beneficial interest, or a certificate issued pursuant to a group life insurance policy.
Sales Contract
This is a written agreement entered into between a Provider and an Owner, the subject of which is a Life Settlement. Sales Contract also includes a written agreement for a loan or other lending transaction, secured primarily by an individual or a group life insurance policy, other than a loan by a life insurance company pursuant to the terms of the Sales Contract, or a loan secured by the cash value of a policy.
Financing Entity
An underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a Provider, credit enhancer, or any entity that has a direct ownership in a policy or certificate that is the subject of a Sales Contract, but :
1. whose principal activity related to the transaction is providing funds to effect the Life settlement or purchase of one or more policies: and
2. who has an agreement in writing with one or more Providers to finance the acquisitions of Sales Contracts.
Financing Entity does not include a non-accredited investor or Purchaser.
Financing Transaction
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.
Special Purpose Entity
A corporation, limited liability company, or other similar entity formed solely to provide either directly or indirectly access to institutional capital markets to a Financing Entity or Provider.
Related Provider Trust
A titling trust or other trust established by a licensed Provider or a Financing Entity for the sole purpose of holding ownership or beneficial interest in purchased policies in connection with a Financing Transaction. In order to qualify as a Provider Trust, the trust must have a written agreement with the licensed Provider under which the licensed Provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files relating to life settlement transactions available to the Department of Insurance as if those records and files were maintained directly by the licensed Provider.
Secondary Markets
These markets do not include a “Provider”, a “Purchaser”, a “Financing Entity”, or a “Special Purpose Entity”, but rather does include any Person who is a qualified institutional buyer or accredited investor (as defined, respectively, in Rule 144A or Regulation D, Rule 501, promulgated under the Securities Act of 1933, as amended.)
Viatical or Life Settlement Provider/Issuer
Means, in the case of a fractional interest in Viatical Investments, any person who creates, for the purpose of sale, the fractional interest, and in the case of a viatical investment that is not fractionalized, any person engaged in the business of effecting transactions in Viatical Investments to which the viator is not a party. Viatical Issuer does not include a broker-dealer, an agent of any person who sells a Viatical Investment to no more than one natural person in a calendar year.
Escrow Agent
Means a state or federally regulated financial institution organized under the laws of the United States or any state, whose responsibilities include accepting investor funds, transferring funds in order to purchase policies, paying insurance premiums and receiving death benefits for all policies where Viatical Investors are not the beneficiaries.
|
