940 CMR, § 18.03

Current through Register 1533, October 25, 2024

Section 18.03 - Definitions

Advertisement (including the terms "advertise" and "advertising") shall be defined in a manner which is consistent with the definition provided by the applicable sections of the Attorney General's Retail Advertising Regulations, 940 CMR 6.00, and means any oral, written, graphic, or pictorial statement made by a Viatical Settlement Company, Broker, Provider, or Representative, or Viatical Loan Company, Broker, Provider, or Representative in any manner in the course of the solicitation of business. Advertisement includes any representations made in a newspaper, magazine, or other publication or on radio or television or contained in any notice, handbill, sign, billboard, banner, poster, display, circular, pamphlet, catalog, or letter. Advertisement includes any representation disseminated within Massachusetts if the advertisement is directed to consumers in Massachusetts.

Certificate means any certificate of group life insurance or other evidence of coverage under a life insurance policy. "Certificateholder" means the Person who owns such a certificate or other indicia of coverage under a life insurance policy.

Clear and conspicuous (including the terms " clearly and conspicuously") shall be defined in a manner which is consistent with the definition provided by the applicable sections of the Attorney General's Retail Advertising Regulations, 940 CMR 6.00. 940 CMR 6.00 provides that clear and conspicuous (including the terms "clearly and conspicuously") shall mean that: the material representation being disclosed is of such size, color, contrast, or audibility and is presented as to be readily noticed and understood by a reasonable person to whom it is being disclosed.

Without limiting the requirements of the preceding sentence, 940 CMR 6.00 states that a representation in an advertisement is not clear and conspicuous unless:

(a) for a printed, written, typed or graphic advertisement, such material representation appears in type which is at least 1/3 the size of the largest type of information which it modifies and is a minimum of eight point type;

(b) for the video of a television advertisement, such material representation:

1. is displayed in type not less than 14 scan lines in height;

2. contains letters of a color or shade that noticeably contrast with the background, and the background does not consist of colors and/or images which obscure or detract attention from the representation or are disparaging to its meaning or importance; and

3. appears on the screen for a duration equal to at least one second for every three words of the material representation but not less than a total of five seconds.

(c) for a radio advertisement or the audio portion of a television advertisement, such material representation complies with the requirements of 940 CMR 6.00.

Financing Entity means any underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a Viatical Settlement Provider or Viatical Loan Provider, credit enhancer, or any Person who may be a party to a Viatical Settlement or Viatical Loan and has a direct ownership or security interest in any policy or certificate which is the subject of a Viatical Settlement Contract or Viatical Loan Agreement, but whose sole activity related to the transaction is providing funds to effect the Viatical Settlement or Viatical Loan, and who has an agreement in writing with a Viatical Settlement Provider or Viatical Loan Provider to act as a participant in a Financing Transaction.

Financing Transaction means any transaction in which a Viatical Settlement Provider, Viatical Loan Provider or a Financing Entity obtains financing for Viatical Settlement Contracts, Viatical Loan Agreements, or Viaticated Policies, or interests therein, including, without limitation, any secured or unsecured financing, any securitization transaction or any securities offering either registered or exempt from registration under federal and state securities law, or any direct purchase of interests in a policy or certificate provided such Financing Transaction complies with federal and state securities law.

Insured means any Person who is the subject of a life insurance policy. For purposes of 940 CMR 18.00, the Insured's privacy shall be protected, regardless of whether or not the Insured is the Policyowner.

Patient Identifying Information means an Insured's name, address, telephone number(s), facsimile number(s), electronic mail address(es), photograph or likeness, employer, employment status, social security number, or any other information which is likely to lead to the identification of the Insured.

Person means a natural or artificial entity, including, but not limited to, individual, partnership, limited liability company, association, trust or corporation or other legal entities.

Policyowner means any Person that has an ownership interest in a life insurance policy or owns or is covered under a group policy insuring the life of a Person.

Viatical Loan means a transaction through which a Policyowner who owns a life insurance policy insuring the life of a Person who has a catastrophic or life-threatening illness or condition or an Insured who has a catastrophic or life-threatening illness or condition secures a loan from a Viatical Loan Provider by using the policy as collateral. The secured loan shall be an amount less than the face value of the policy, with the difference between the loan principal and the face value of the policy being used to pay, among other things, the accrued loan interest. Upon repayment of the Viatical Loan, the Viatical Loan Provider's collateral interest in the policy terminates and the security interest is released to the original Policyholder, or his or her designee. "Viatical Loan" shall not include:

(a) loans taken against the cash value of a life insurance policy for the purpose of paying premiums due; or

(b) loans made by any natural person who enters into no more than one loan agreement in a calendar year for any value less than the expected death benefit; or

(c) loans made by a family member or friend, who is not in the business of providing or obtaining Viatical Loans, who enters into a loan agreement for any value less than the expected death benefit.

Viatical Loan Agreement means the written contract between the Viatical Loan Provider and the Viatical Loan Applicant or Borrower.

Viatical Loan Borrower (hereinafter also referred to in 940 CMR 18.00 as the " Borrower") means the owner of a life insurance policy insuring the life of a Person with a catastrophic or life-threatening illness or condition or the Certificateholder who enters into a Viatical Loan. For purposes of 940 CMR 18.00, the Viatical Loan Borrower is referred to as the "Applicant" during the viatical loan application process and prior to receiving the Viatical Loan. "Viatical Loan Borrower" shall not include Viatical Loan Providers, Viatical Loan Brokers, Viatical Loan Representatives or Financing Entities.

Viatical Loan Broker means a Person that, on behalf of a Viatical Loan Borrower and for a fee, commission or other valuable consideration, offers or attempts to negotiate Viatical Loan Agreements between a Viatical Loan Borrower and one or more Viatical Loan Providers. Irrespective of the manner in which the Viatical Loan Broker is compensated, a Viatical Loan Broker is deemed to represent only the Borrower and owes a fiduciary duty to the Borrower to act according to the Borrower's instructions and in the best interest of the Borrower. "Viatical Loan Broker" shall not include an attorney, accountant, or financial advisor or planner retained to represent the Borrower whose compensation is paid directly by or at the direction of the Borrower.

Viatical Loan Company means a company that engages in the practice of providing and/or servicing Viatical Loans.

Viatical Loan Provider means a Person, other than a Viatical Loan Borrower, that enters into a Viatical Loan Arrangement with a Policyowner who owns a policy insuring the life of a Person who has a catastrophic or life-threatening illness or condition or with an Insured who has a catastrophic or life-threatening illness or condition. Upon repayment of the Viatical Loan, the Viatical Loan Provider's collateral interest in the policy terminates and the security interest is released to the Borrower, or his or her designee.

Viatical Loan Representative means a Person who is an authorized agent of a Viatical Loan Provider or Viatical Loan Broker who acts or aids in any manner in the solicitation of a Viatical Loan. "Viatical Loan Representative" shall not include:

(a) an attorney, an accountant, a financial advisor or planner, or any person exercising a power of attorney granted by a Viatical Loan Borrower; or

(b) any Person who is retained to represent the Viatical Loan Borrower and whose compensation is paid by or at the discretion of the Borrower regardless of whether the Viatical Loan is consummated; or

(c) a credit union, trade union, not-for-profit entity, or an employer or association, that makes general information regarding viatical loans and viatical settlements available to its employees or members, at no charge, unless such information is distributed in exchange for financial consideration from a Viatical Loan Provider or Broker.

The Viatical Loan Representative is deemed to represent only the Viatical Loan Provider or Viatical Loan Broker.

Viatical Settlement means a transaction for the sale, absolute assignment, transfer, or bequest of the death benefit payable under, or ownership of, a life insurance policy entered into between a Viatical Settlement Provider and a Policyowner who owns a life insurance policy insuring the life of a Person who has a catastrophic or life-threatening illness or condition or an Insured who has a catastrophic or life-threatening illness or condition.

Viatical Settlement Broker means a Person that on behalf of a Viator and for a fee, commission or other valuable consideration, offers or attempts to negotiate Viatical Settlements between a Viator and one or more Viatical Settlement Providers. Irrespective of the manner in which the Viatical Settlement Broker is compensated, a Viatical Settlement Broker is deemed to represent only the Viator 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" shall not include an attorney, an accountant, or a financial advisor or planner retained to represent the Viator whose compensation is paid directly by or at the direction of the Viator.

Viatical Settlement Company means any company that engages in the practice of providing and/or servicing Viatical Settlements.

Viatical Settlement Contract means a written agreement entered into between a Viatical Settlement Provider and a Viator. The agreement shall establish the terms under which the Viatical Settlement Provider will pay compensation or anything of value, 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 all or a portion of the insurance policy or certificate of insurance to the Viatical Settlement Provider.

Viatical Settlement Provider means a Person, other than a Viator, that enters into a Viatical Settlement Contract. Viatical Settlement Provider also means a Person that obtains financing from a Financing Entity for the purchase, acquisition, transfer or other assignment of one or more Viatical Settlement Contracts, Viaticated Policies or interests therein or otherwise sells, assigns, transfers, pledges, hypothecates or otherwise disposes of one or more Viatical Settlement Contracts, Viaticated Policies or interests therein. "Viatical Settlement Provider" shall 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 as collateral for a loan made to a Person other than a Viator for which the life insurance policy is not the primary collateral;

(b) the issuer of a life insurance policy providing accelerated benefits and pursuant to the contract;

(c) a natural person who enters into 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; or

(d) any Financing Entity or Viatical Settlement Broker.

Viatical Settlement Representative means a Person who is an authorized agent of a Viatical Settlement Provider or Viatical Settlement Broker who acts or aids in any manner in the solicitation of a Viatical Settlement. "Viatical Settlement Representative" does not include:

(a) an attorney, an accountant, a financial advisor or planner, or any Person exercising a power of attorney granted by a Viator; or

(b) any Person who is retained to represent the Viator and whose compensation is paid by or at the discretion of the Viator regardless of whether the Viatical Settlement is consummated; or

(c) a credit union, trade union, not-for-profit entity, or an employer or association that makes general information regarding viatical loans and viatical settlements available to its member or employees, at no charge, unless such information is distributed in exchange for financial consideration from a Viatical Settlement Provider or Broker.

A Viatical Settlement Representative is deemed to represent only the Viatical Settlement Provider or Viatical Settlement Broker.

Viaticated Policy means any life insurance policy or certificate 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 certificateholder under a group policy insuring the life of a Person with a catastrophic, life-threatening or chronic illness or condition who enters or seeks to enter into a Viatical Settlement Contract. For purposes of 940 CMR 18.00, a Viatical Settlement Provider shall not be considered a Viator in any subsequent transaction involving a policy for which it initially served as a Viatical Settlement Provider. "Viator" shall not include a Viatical Settlement Provider, Viatical Settlement Broker, Viatical Settlement Representative, or Financing Entity.

940 CMR, § 18.03