N.H. Rev. Stat. Ann. § 408-D:2 – Definitions

In this chapter:

I. "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 before the public, directly or indirectly, in this state, for the purpose of creating an interest in or inducing a person to purchase or sell, assign, devise, bequest, or transfer the death benefit or ownership of a life insurance policy to a life settlement contact.
II. "Business of life settlements" means an activity involved in, but not limited to, the offering, soliciting, negotiating, procuring, effectuating, 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 life settlement contract.
III. "Chronically ill" means:
1. (a) Being unable to perform at least 2 activities of daily living, including eating, toileting, transferring, bathing, dressing, or continence;
2. (b) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or
3. (c) Having a level of disability similar to that described in subparagraph (a) as determined by the department of health and human services.
IV. "Commissioner" means the insurance commissioner.
V.
1. (a) "Financing entity" means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a life settlement provider, credit enhancer, or any entity that has a direct ownership in a policy or certificate that is the subject of a life settlement contract, but:
  1. (1) Whose principal activity related to the transaction is providing funds to effect the life settlement contract or purchase of one or more viaticated policies; and
  2. (2) Who has an agreement in writing with one or more licensed life settlement providers to finance the acquisition of life settlement contracts.
2. (b) "Financing entity" does not include a non-accredited investor or a life settlement purchaser.
VI. "Fraudulent life settlement act" includes:
1. (a) Acts or omissions 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, but not limited to:
  1. (1) Presenting, causing to be presented or preparing with knowledge or belief that it will be presented to or by a life settlement provider, life settlement premium finance lender, life settlement producer, life 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 life settlement contract or insurance policy;
    (B) The underwriting of a life settlement contract or insurance policy;
    (C) A claim for payment or benefit pursuant to a life 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 life settlement contract or insurance policy;
    (F) The reinstatement or conversion of an insurance policy;
    (G) The solicitation, offer, effectuation, or sale of a life settlement contract or insurance policy;
    (H) The issuance of written evidence of life settlement contracts or insurance;
    (I) A financing transaction; or
    (J) A plan which involves "stranger-originated life insurance" (STOLI) as defined in paragraph XVI.
  2. (2) Employing any plan, financial structure, device, scheme, or artifice to defraud related to viaticated policies.
2. (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. (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 life settlements;
  2. (2) Misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person;
  3. (3) Transact the business of life settlements in violation of laws requiring a license, certificate of authority or other legal authority for the transaction of the business of life settlements; or
  4. (4) File with the commissioner or the equivalent chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner.
3. (c) Embezzlement, theft, misappropriation or conversion of moneys, funds, premiums, credits, or other property of a life settlement provider, insurer, insured, viator, insurance policy owner, or any other person engaged in the business of life settlements or insurance.
4. (d) Recklessly entering into, negotiating, brokering, otherwise dealing in a life 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 life 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.
5. (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.
6. (f) Attempting to commit, assisting, aiding or abetting the commission of, or conspiracy to commit the acts or omissions specified in this paragraph.
VII. "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 RSA 402-J:7, I(a).
VIII. "Life settlement producer" means a person as provided for in RSA 408-D:3, who working for a fee, commission, or other valuable consideration, offers or attempts to solicit or negotiate life settlement contracts between a viator and one or more life settlement providers or one or more life settlement producers. 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 life settlement provider or life settlement purchaser.
IX. "Life settlement contract" 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 contacts, which life insurance contract insures the life of a person residing in this state.
1. (a) "Life settlement contract" includes a written agreement between a viator and a life settlement provider or any affiliate of the life 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.
2. (b) "Life settlement contract" includes a premium finance loan made for a life insurance policy by a lender to viator on, before or after the date of issuance of the policy where:
  1. (1) The viator or the insured receives on the date of the premium finance loan a guarantee of a future life settlement value of the policy; or
  2. (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.
3. (c) "Life settlement contract" does not include:
  1. (1) A policy loan or accelerated death benefit made by the insurer pursuant to the policy's terms;
  2. (2) Loan proceeds that are used solely to pay:
    (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. (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 the default itself is not pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this chapter;
  4. (4) A loan made by a lender that does not violate RSA 415-B, provided that the premium finance loan is not described in subparagraph (b);
  5. (5) An agreement where all the parties are closely related to the insured by blood or law, or have a lawful substantial economic interested in the continued life, health and bodily safety of the person insured, or are trusts established primarily for the benefit of such parties;
  6. (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. (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;
    (B) 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. (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. (9) Any other contract, transaction, or arrangement exempted from the definition of life settlement contract by the commissioner based on a determination that the contract, transaction, or arrangement is not of the type to be regulated by this chapter.
X.
1. (a) "Life settlement provider" means a person, other than a viator, that enters into or effectuates a life settlement contract with a viator resident in this state.
2. (b) "Life settlement provider" does not include:
  1. (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. (2) 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;
  3. (3) The issuer of the life insurance policy;
  4. (4) An authorized or eligible insurer that provides stop loss coverage or financial guaranty insurance to a life settlement provider, life settlement purchaser, financing entity, special purpose entity or related provider trust;
  5. (5) 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;
  6. (6) A financing entity;
  7. (7) A special purpose entity;
  8. (8) A related provider trust;
  9. (9) A life settlement purchaser; or
  10. (10) Any other person that the commissioner determines is not the type of person intended to be covered by the definition of life settlement provider.
XI.
1. (a) "Life settlement purchaser" means a person who provides a sum of money as consideration for the 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 life settlement contract or is the beneficiary of a life insurance policy that has been or will be the subject of a life settlement contract, for the purpose of deriving an economic benefit.
2. (b) "Life settlement purchaser" does not include:
  1. (1) A licensee under this chapter;
  2. (2) 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;
  3. (3) A financing entity;
  4. (4) A special purpose entity; or
  5. (5) A related provider trust.
XII. "Person" means a natural person or a legal entity, including, but not limited to, an individual, a partnership, limited liability company, association, trust, or corporation.
XIII. "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.
XIV. "Related provider trust" means a titling trust or other trust established by a licensed life 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. In order to qualify as a related provider trust, the trust must have a written agreement with the licensed life settlement provider under which the licensed life 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 life settlement transactions available to the commissioner as if those records and files were maintained directly by the licensed life settlement provider.
XV. "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:
1. (a) For a financing entity or licensed life settlement provider;
2. (b) 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 Securities Act of 1933, as amended; or
3. (c) The securities pay a fixed rate of return commensurate with established asset-backed institutional capital markets.
XVI. "Stranger-originated life insurance" or "STOLI" 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. STOLI 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 himself, herself, or itself, and where, at the time of inception, there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy and/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 insurable interest laws and the prohibition against wagering on life. STOLI arrangements do not include those practices set forth in RSA 408-D:2, XI(b)(2).
XVII. "Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in 24 months or less.
XVIII. "Viaticated policy" means a life insurance policy or certificate that has been acquired by a life settlement provider pursuant to a life settlement contract.
XIX.
1. (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 life settlement contract. For the purposes of this chapter, 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.
2. (b) "Viator" does not include:
  1. (1) A licensee under this chapter, including a life insurance producer acting as a life settlement producer pursuant to this chapter;
  2. (2) Qualified institutional buyer as defined, respectively, in Rule 144A promulgated under the Federal Securities Act of 1933, as amended;
  3. (3) A financing entity;
  4. (4) A special purpose entity; or
  5. (5) A related provider trust.

Source. 2010, 132:1, eff. June 14, 2010.