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Virginia Administrative Code
Title 14. Insurance
Agency 5. State Corporation Commission, Bureau of Insurance
Chapter 71. Rules Governing Viatical Settlement Providers and Viatical Settlement Brokers
1/19/2020

14VAC5-71-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Chronically ill" means (i) being unable to perform at least two activities of daily living, which shall include eating, toileting, transferring, bathing, dressing or continence, (ii) requiring substantial supervision by another person to protect the individual from threats to health and safety due to severe cognitive impairment, or (iii) having a level of disability similar to that described in clause (i) as determined by the U.S. Secretary of Health and Human Resources as required by § 38.2-6000 of the Code of Virginia.

"Commission" means the Virginia State Corporation Commission.

"Insured" means the person covered under the life insurance policy or certificate being considered for viatication.

"Legal entity" means an entity, other than a natural person, that can function legally, sue or be sued, and make decisions through agents, as in the case of a corporation. Legal entity includes a partnership, limited partnership, limited liability company, corporation, or other legally functioning business entities, other than a sole proprietorship.

"Licensee under this chapter" means a person licensed by the commission as a viatical settlement provider or viatical settlement broker, as may be reasonably construed from the content in which the term appears.

"Life expectancy" means the number of months the individual insured under the life insurance policy or certificate to be viaticated can be expected to live as determined by the viatical settlement provider considering medical records and appropriate experiential data.

"NAIC" means the National Association of Insurance Commissioners.

"Net death benefit" means the amount of the life insurance policy or certificate to be viaticated less any outstanding debts or liens.

"Patient identifying information" means an insured's address, telephone number, facsimile number, electronic mail address, photograph or likeness, employer, employment status, social security number, or any other information that is likely to lead to the identification of the insured.

"Policy" means an individual or group policy, group certificate, contract or arrangement of life insurance affecting the rights of a resident of this Commonwealth or bearing a reasonable relation to this Commonwealth, regardless of whether delivered or issued for delivery in this Commonwealth.

"Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in 24 months or less.

"Viatical settlement broker" means a person licensed in Virginia pursuant to § 38.2-1865.1 of the Code of Virginia, that on behalf of another and for a fee, commission or other valuable consideration, introduces viators to viatical settlement providers, or offers or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers. A viatical settlement broker may act as agent for a viatical settlement provider or on behalf of the viator, provided that a viatical settlement broker shall not be deemed to act exclusively for the viator unless, pursuant to written agreement between the parties, the viatical settlement broker agrees (i) to disclose fully all interests in the viatical settlement contract and relationships with the viatical settlement provider including its affiliates and appointed or contracted agents, and (ii) that compensation for services as a viatical settlement broker shall be paid directly and only by 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 viatical settlement purchaser.

"Viatical settlement contract" means a written agreement establishing the terms under which compensation or anything of value will be paid, 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 any portion of the insurance policy or certificate of insurance. A viatical settlement contract also includes a contract for a loan or other financing transaction with a viator secured primarily by an individual or group life insurance policy, other than a loan by a life insurance company pursuant to the terms of the life insurance contract, or a loan secured by the cash value of the policy. A viatical settlement contract includes an agreement with a viator to transfer ownership or change the beneficiary designation at a later date regardless of the date that compensation is paid to the viator. Viatical settlement contracts do not include accelerated death benefit provisions governed by 14VAC5-70, contained in life insurance policies, whether issued with the original policy or as a rider.

"Viatical settlement provider" means a person, other than the viator, that enters into or effectuates a viatical settlement contract. Viatical settlement provider does not include: (i) a bank, savings bank, savings and loan association, credit union or other licensed lending institution that takes an assignment of a life insurance policy as collateral for a loan; (ii) the issuer of a life insurance policy providing accelerated death benefits governed by 14VAC5-70 and pursuant to the contract; (iii) an authorized or eligible insurer that provides stop loss coverage to a viatical settlement provider, viatical settlement purchaser, financing entity, special purpose entity or related provider trust; (iv) 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; (v) a financing entity; (vi) a special purpose entity; (vii) a related provider trust; (viii) a viatical settlement purchaser; or (ix) an accredited investor or qualified institutional buyer as described in Securities and Exchange Commission (SEC) Regulation D (17 CFR 230.501 through 17 CFR 230.508) and defined, respectively, in Rule 501 (17 CFR 230.501) and Rule 144A (17 CFR 230.144A) under the Securities Act of 1933, as amended, and who purchases a viaticated policy from a viatical settlement provider and does not communicate with the viator or insured who is a resident of this Commonwealth except through a licensee under this chapter.

"Viatical settlement purchaser" means a person who gives 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 (i) a licensee under this chapter; (ii) an accredited investor or qualified institutional buyer as described in Regulation D (17 CFR 230.501 through 17 CFR 230.508) and defined, respectively, in Rule 501 (17 CFR 230.501) and Rule 144A (17 CFR 230.144A) under the Securities Act of 1933, as amended; (iii) a financing entity; (iv) a special purpose entity; or (v) a related provider trust.

"Viaticated policy" means a life insurance policy, including a certificate of life insurance issued under a group life insurance policy, that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract.

"Viator" means the owner of a life insurance policy or a certificate holder under a group policy who enters or seeks to enter into a viatical settlement contract. For the purposes of this chapter and the application of Article 6.1 (§ 38.2-1865.1 et seq.) of Chapter 18 of Title 38.2 of the Code of Virginia, 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 except where specifically addressed. Viator does not include (i) a licensee under this chapter; (ii) an accredited investor or qualified institutional buyer as described in Regulation D (17 CFR 230.501 through 17 CFR 230.508) and defined, respectively, in Rule 501 (17 CFR 230.501) and Rule 144A (17 CFR 230.144A) under the Securities Act of 1933, as amended; (iii) a financing entity; (iv) a special purpose entity; or (v) a related provider trust.

Statutory Authority

§§ 12.1-13 and 38.2-223 of the Code of Virginia.

Historical Notes

Derived from Volume 14, Issue 02, eff. October 15, 1997; amended, Virginia Register Volume 19, Issue 01, eff. September 4, 2002; Volume 20, Issue 05, eff. November 1, 2003.

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