State Codes and Statutes

Statutes > Illinois > Chapter215 > 3153

    (215 ILCS 159/1)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 1. Short title. This Act may be cited as the Viatical Settlements Act of 2009.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/5)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 5. Definitions.
    "Accredited investor" means an accredited investor as defined in Rule 501(a) promulgated under the Securities Act of 1933 (15 U.S.C. 77 et seq.), as amended.
    "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, digital picture slides, motion pictures, and videos published, disseminated, circulated, or placed 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 policy pursuant to a viatical settlement contract.
    "Alien licensee" means a licensee incorporated or organized under the laws of any country other than the United States.
    "Business of viatical settlements" means any activity involved in, but not limited to, the offering, soliciting, negotiating, procuring, effectuating, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, or hypothecating or in any other manner acquiring an interest in a life insurance policy by means of a viatical settlement contract or other agreement.
    "Chronically ill" means having been certified within the
     preceding 12‑month period by a licensed health professional as:
        (1) being unable to perform, without substantial
     assistance from another individual and for at least 90 days due to a loss of functional capacity, at least 2 activities of daily living, including, but not limited to, eating, toileting, transferring, bathing, dressing, or continence;
        (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 paragraph (1) as determined by the Secretary of Health and Human Services.
    "Controlling person" means any person, firm, association, or corporation that directly or indirectly has the power to direct or cause to be directed the management, control, or activities of the viatical settlement provider.
    "Director" means the Director of the Division of Insurance of the Department of Financial and Professional Regulation.
    "Division" means the Division of Insurance of the Department of Financial and Professional Regulation.
    "Escrow agent" means an independent third‑party person who, pursuant to a written agreement signed by the viatical settlement provider and viator, provides escrow services related to the acquisition of a life insurance policy pursuant to a viatical settlement contract. "Escrow agent" does not include any person associated or affiliated with or under the control of a licensee.
    "Financial institution" means a financial institution as defined by the Financial Institutions Insurance Sales Law in Article XLIV of the Illinois Insurance Code.
    "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 an entity that has a direct ownership in a policy that is the subject of a viatical settlement contract, and to which both of the following apply:
        (1) its principal activity related to the transaction
     is providing funds to effect the viatical settlement or purchase of one or more viaticated policies; and
        (2) it has an agreement in writing with one or more
     licensed viatical settlement providers to finance the acquisition of viatical settlement contracts.
"Financing entity" does not include an investor that is not
     an accredited investor.
    "Financing transaction" means a transaction in which a viatical settlement provider obtains financing from a financing entity, including, without limitation, any secured or unsecured financing, securitization transaction, or securities offering that either is registered or exempt from registration under federal and State securities law.
    "Foreign licensee" means any viatical settlement provider incorporated or organized under the laws of any state of the United States other than this State.
    "Insurance producer" means an insurance producer as
     defined by Section 10 of Article XXXI of the Illinois Insurance Code.
    "Licensee" means a viatical settlement provider or viatical settlement broker.
    "Life expectancy provider" means a person who determines or holds himself or herself out as determining life expectancies or mortality ratings used to determine life expectancies on behalf of or in connection with any of the following:
        (1) A viatical settlement provider, viatical
     settlement broker, or person engaged in the business of viatical settlements.
        (2) A viatical investment as defined by Section 2.33
     of the Illinois Securities Law of 1953 or a viatical settlement contract.
    "NAIC" means the National Association of Insurance Commissioners.
    "Person" means an individual or a legal entity,
     including, without limitation, a partnership, limited liability company, limited liability partnership, association, trust, business trust, or corporation.
    "Policy" means an individual or group policy, group
     certificate, contract, or arrangement of insurance of the class defined by subsection (a) of Section 4 of the Illinois Insurance Code owned by a resident of this State, regardless of whether delivered or issued for delivery in this State.
    "Qualified institutional buyer" means a qualified institutional buyer as defined in Rule 144 promulgated under the Securities Act of 1933, as amended.
    "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 Director as if those records and files were maintained directly by the licensed viatical settlement provider.
    "Special purpose entity" means a corporation,
     partnership, trust, limited liability company, or other similar entity formed only to provide, directly or indirectly, access to institutional capital markets (i) for a financing entity or licensed viatical settlement provider; or (ii) in connection with a transaction in which the securities in the special purposes entity are acquired by the viator or by qualified institutional buyers or the securities pay a fixed rate of return commensurate with established asset‑backed institutional capital markets.
    "Stranger‑originated life insurance" or "STOLI" means an act, practice, or arrangement 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 or itself and where, at the time of policy inception, there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy or policy benefits to a third party. Trusts created to give the appearance of an insurable interest and used to initiate policies for investors violate insurance interest laws and the prohibition against wagering on life. STOLI arrangements do not include lawful viatical settlement contracts as permitted by this Act.
    "Terminally ill" means certified by a physician as having
     an illness or physical condition that reasonably is expected to result in death in 24 months or less.
    "Viatical settlement broker" means a licensed insurance producer who has been issued a license pursuant to Section 500‑35(a)(1) or 500‑35(a)(2) of the Insurance Code who, working exclusively on behalf of a viator and for a fee, commission, or other valuable consideration, offers, solicits, promotes, or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers or one or more viatical settlement brokers. "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.
    "Viatical settlement contract" means any of the following:
        (1) A written agreement between a viator and a
     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.
        (2) A written agreement for a loan or other lending
     transaction, secured primarily by an individual life insurance policy or an individual certificate of a group life insurance policy.
        (3) The transfer for compensation or value of
     ownership of a 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 contracts and the life insurance contract insures the life of a person residing in this State.
        (4) 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 in either of the following situations:
            (A) The viator or the insured receives a
         guarantee of the viatical settlement value of the policy.
            (B) The viator or the insured agrees to sell the
         policy or any portion of the policy's death benefit on any date before or after issuance of the policy.
    "Viatical settlement contract" does not include any of the following acts, practices, or arrangements listed below in subparagraphs (a) through (i) of this definition of "viatical settlement contract", unless part of a plan, scheme, device, or artifice to avoid application of this Act; provided, however, that the list of excluded items contained in subparagraphs (a) through (i) is not intended to be an exhaustive list and that an act, practice, or arrangement that is not described below in subparagraphs (a) through (i) does not necessarily constitute a viatical settlement contract:
        (a) A policy loan or accelerated death benefit made
     by the insurer pursuant to the policy's terms;
        (b) Loan proceeds that are used solely to pay: (i)
     premiums for the policy and (ii) 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;
        (c) A loan made by a bank or other 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 the default is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this Act;
        (d) A loan made by a lender that does not violate
     Article XXXIIa of the Illinois Insurance Code, provided that the premium finance loan is not described in this Act;
        (e) An agreement in which all the parties (i) are
     closely related to the insured by blood or law or (ii) have a lawful substantial economic interest in the continued life, health, and bodily safety of the person insured, or trusts established primarily for the benefit of such parties;
        (f) 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;
        (g) A bona fide business succession planning
     arrangement: (i) 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; (ii) 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 (iii) 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;
        (h) 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
        (i) Any other contract, transaction, or arrangement
     exempted from the definition of viatical settlement contract by the Director based on the Director's determination that the contract, transaction, or arrangement is not of the type intended to be regulated by this Act.
    "Viatical settlement investment agent" means a person who is an appointed or contracted agent of a licensed viatical settlement provider who solicits or arranges the funding for the purchase of a viatical settlement by a viatical settlement purchaser and who is acting on behalf of a viatical settlement provider. A viatical settlement investment agent is deemed to represent the viatical settlement provider of whom the viatical settlement investment agent is an appointed or contracted agent.
    "Viatical settlement provider" means a person, other than
     a viator, who enters into or effectuates a viatical settlement contract with a viator. "Viatical settlement provider" does not include:
        (1) a bank, savings bank, savings and loan
     association, credit union, or other financial institution that takes an assignment of a policy as collateral for a loan;
        (2) a financial institution or premium finance
     company making premium finance loans and exempted by the Director from the licensing requirement under the premium finance laws where the institution or company takes an assignment of a life insurance policy solely as collateral for a premium finance loan;
        (3) the issuer of the life insurance policy;
        (4) 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;
        (5) An individual person who enters into or
     effectuates no more than one viatical settlement contract in a calendar year for the transfer of policies for any value less than the expected death benefit;
        (6) a financing entity;
        (7) a special purpose entity;
        (8) a related provider trust;
        (9) a viatical settlement purchaser; or
        (10) any other person that the Director determines is
     consistent with the definition of viatical settlement provider.
    "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, in each case where such policy 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 Act; (ii) an accredited investor or qualified institutional buyer; (iii) a financing entity; (iv) a special purpose entity; or (v) a related provider trust.
    "Viaticated policy" means a 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 Act, a viator 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. "Viator" does not include:
        (1) a licensee;
        (2) a qualified institutional buyer;
        (3) a financing entity;
        (4) a special purpose entity; or
        (5) a related provider trust.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/10)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 10. License and bond requirements.
    (a) A person shall not operate as a viatical settlement provider or viatical settlement broker without first obtaining a license from the chief insurance regulatory official of the state of residence of the viator. A viatical settlement provider transacting business in this State shall provide written notice to the Director that it is engaged in such business not less than 30 days prior to the effective date of this Act. Viatical settlement providers shall apply for licensing annually thereafter in a form and manner as prescribed by this Act.
    (b) A person shall not operate as a viatical settlement broker without first obtaining an insurance producer license from the Director and completing the viatical settlement broker training requirements as provided by Section 11 of this Act.
    (c) An insurance producer shall not operate as a viatical settlement broker unless the producer has been duly licensed as a resident insurance producer with a life line of authority in this State or the insurance producer's home state for at least one year.
    (d) Before operating as a viatical settlement broker, the insurance producer, including a business entity licensed in this State as an insurance producer, shall notify the Director that the insurance producer is acting as a viatical settlement broker on a form prescribed by the Director, and shall pay a $500 registration fee which shall be deposited into the Insurance Producer Administration Fund. Notification shall include an acknowledgement by the insurance producer that he or she will operate as a viatical settlement broker in accordance with this Act.
    If a business entity with an insurance producer license registers as a viatical settlement broker, then that registration authorizes all partners, officers, members, and designated employees to act as viatical settlement brokers. All persons acting as viatical settlement brokers pursuant to such a registration shall be named in the application and any supplements to the application.
    (e) A duly licensed resident insurance producer with a life product line or authority in this State or the insurance producer's home state for at least one year, lawfully transacting business as a viatical settlement broker prior to the effective date of this Act may continue to do so, pending receipt by the Director of the notice required by subsection (d) of this Section, provided that the notice is received by the Director no later than 30 days after the effective date of this Act.
    (f) A person licensed as an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator, whose compensation is not paid directly or indirectly by the viatical settlement provider, may negotiate viatical settlement contracts on behalf of the viator without having to obtain a license as a viatical settlement broker.
    (g) A person shall not operate as a viatical settlement provider without first obtaining a license from the Director.
    (h) Application for a viatical settlement provider license shall be made to the Director by the applicant on a form prescribed by the Director. The applications shall be accompanied by a $3,000 fee, which shall be deposited into the Insurance Producer Administration Fund.
    (i) Viatical settlement provider licenses may be renewed from year to year on the anniversary date upon payment of the annual renewal fee of $1,500. Failure to pay the fees by the renewal date results in expiration of the license.
    (j) The applicant for a viatical settlement provider license shall provide information on forms required by the Director. The Director shall have authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers, members, and employees, and the Director may, in the exercise of the Director's discretion, refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner, or member thereof who may materially influence the applicant's conduct meets the standards of this Act.
    A viatical settlement provider license issued to a legal entity authorizes all partners, officers, members, and designated employees to act as viatical settlement providers, as applicable, under the license, and all those persons shall be named in the application and any supplements to the application.
    (k) Upon the filing of a viatical settlement provider license application and the payment of the license fee, the Director shall make an investigation of each applicant and issue a license if the Director finds that the applicant:
        (1) has provided a detailed plan of operation;
        (2) is competent and trustworthy and intends to act
     in good faith in the capacity involved by the license applied for;
        (3) has a good business reputation and has had
     experience, training, or education so as to be qualified in the business for which the license is applied for;
        (4) (A) has demonstrated evidence of financial
     responsibility in a format prescribed by the Director through either a surety bond executed and issued by an insurer authorized to issue surety bonds in this State or a deposit of cash, certificates of deposit or securities or any combination thereof, or irrevocable letter of credit in the amount of $125,000;
            (B) the Director may ask for evidence of
         financial responsibility at any time the Director deems necessary;
            (C) any surety bond issued pursuant to this
         subsection (k) shall be in the favor of this State and shall specifically authorize recovery by the Director on behalf of any person in this State who sustained damages as the result of erroneous acts, failure to act, conviction of fraud or conviction of unfair practices by the viatical settlement provider;
            (D) notwithstanding any other provision of this
         Section to the contrary, the Director shall accept, as evidence of financial responsibility, proof that financial instruments in accordance with the requirements in this subsection (k) have been filed with one or more states where the applicant is licensed as a viatical settlement provider;
        (5) if a legal entity, provides a certificate of good
     standing from the state of its domicile; and
        (6) has provided an anti‑fraud plan that meets the
     requirements of Section 65 of this Act.
    (l) The Director shall not issue a viatical settlement
     provider license to a nonresident applicant unless a written designation of an agent for service of process is filed and maintained with the Director or the applicant has filed with the Director the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the Director.
    (m) An applicant for a viatical settlement provider license shall provide all information requested by the Director. The Director may, at any time, require the applicant to fully disclose the identity of all stockholders, partners, officers, members, and employees of the viatical settlement provider, and the Director may refuse to issue a license to an applicant that is not an individual if the Director is not satisfied that each stockholder, partner, officer, member, and employee who may materially influence the applicant's conduct meets the standards set forth in this Act. The Director may also require the applicant to disclose the method the applicant will use to determine and receive life expectancies, the applicant's intended use of life expectancies, and a written plan containing policies and procedures to use when determining life expectancies.
    (n) A viatical settlement provider shall provide to the
     Director new or revised information about officers, 10% or more stockholders, partners, directors, members, or designated employees within 30 days after the change.
    (o) Viatical settlement providers licensed under the Viatical Settlements Act as of the effective date of this amendatory Act of the 96th General Assembly shall be deemed licensed under this Act. All such providers are required to maintain or come into compliance with all of the license requirements of this Act and to provide evidence to the Director that they are in compliance with item (4) of subsection (k) of this Section, concerning financial responsibility; item (6) of subsection (k) of this Section, concerning an anti‑fraud plan; and subsection (m) of this Section, concerning life expectancies no later than the effective date of this Act. Such providers shall not be exempt from the requirements for viatical settlement provider license renewal set forth in subsection (i) of this Section. The first anniversary date for the purpose of license renewal under subsection (i) shall be one year from the effective date of this amendatory Act of the 96th General Assembly.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/11)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 11. Viatical settlement broker training requirements.
    (a) Viatical settlement broker training shall be required as follows:
        (1) An individual may not sell, solicit, or negotiate
     viatical settlement contracts unless the individual is licensed as a life insurance producer or viatical settlement broker and has completed a one‑time training course. The training shall meet the requirements set forth in subsection (b) of this Section.
        (2) An individual already licensed and selling,
     soliciting, or negotiating viatical settlement contracts on the effective date of this Act may not continue to sell, solicit, or negotiate viatical settlement contracts unless the individual has completed a one‑time training course, as set forth in subsection (b) of this Section, within 6 months after the effective date of this Act or within 6 months after availability of the training course, whichever is later.
        (3) In addition to the one‑time training course
     required under items (1) and (2) of this subsection (a), an individual who sells, solicits, or negotiates viatical settlement contracts shall complete ongoing training as set forth in subsection (b) of this Section.
        (4) The training requirements of subsection (b) of
     this Section may be approved as continuing education courses under Section 500‑35(b)(1) of the Illinois Insurance Code.
    (b) Minimum education and training shall be required as follows:
        (1) The one‑time training required by this Section
     shall be no less than 4 hours and the ongoing training required by this Section shall be no less than 4 hours over a 24‑month period.
        (2) The training required under item (1) of this
     subsection (b) shall consist of topics related to viatical settlement contracts, including, but not limited to:
            (A) State and federal laws and regulations
         regarding viatical settlement transactions;
            (B) potential tax implications for participants
         in viatical settlement contracts;
            (C) potential impact on public benefits payments
         to viatical settlement participants;
            (D) alternatives to viatical settlement
         contracts; and
            (E) consumer suitability standards and guidelines.
        (3) The training required by this Section shall not
     include training that is specific to or that includes any sales or marketing information, materials, or training of any company, other than those required by State or federal law.
    (c) Viatical settlement providers shall provide verification of training as follows:
        (1) Viatical settlement providers subject to this Act
     shall obtain verification that a producer receives training required by subsection (a) of this Section before a producer is permitted to sell, solicit, or negotiate viatical settlement contracts. Viatical settlement providers shall maintain records for verification subject to the State's record retention requirements and make the verification available to the Director upon request.
        (2) Viatical settlement providers subject to this Act
     shall maintain records with respect to the training of viatical settlement brokers with whom the provider contracts or otherwise engages in viatical settlement transactions. These records shall be maintained in accordance with the State's record retention requirements and shall be made available to the Director upon request.
    

State Codes and Statutes

Statutes > Illinois > Chapter215 > 3153

    (215 ILCS 159/1)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 1. Short title. This Act may be cited as the Viatical Settlements Act of 2009.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/5)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 5. Definitions.
    "Accredited investor" means an accredited investor as defined in Rule 501(a) promulgated under the Securities Act of 1933 (15 U.S.C. 77 et seq.), as amended.
    "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, digital picture slides, motion pictures, and videos published, disseminated, circulated, or placed 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 policy pursuant to a viatical settlement contract.
    "Alien licensee" means a licensee incorporated or organized under the laws of any country other than the United States.
    "Business of viatical settlements" means any activity involved in, but not limited to, the offering, soliciting, negotiating, procuring, effectuating, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, or hypothecating or in any other manner acquiring an interest in a life insurance policy by means of a viatical settlement contract or other agreement.
    "Chronically ill" means having been certified within the
     preceding 12‑month period by a licensed health professional as:
        (1) being unable to perform, without substantial
     assistance from another individual and for at least 90 days due to a loss of functional capacity, at least 2 activities of daily living, including, but not limited to, eating, toileting, transferring, bathing, dressing, or continence;
        (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 paragraph (1) as determined by the Secretary of Health and Human Services.
    "Controlling person" means any person, firm, association, or corporation that directly or indirectly has the power to direct or cause to be directed the management, control, or activities of the viatical settlement provider.
    "Director" means the Director of the Division of Insurance of the Department of Financial and Professional Regulation.
    "Division" means the Division of Insurance of the Department of Financial and Professional Regulation.
    "Escrow agent" means an independent third‑party person who, pursuant to a written agreement signed by the viatical settlement provider and viator, provides escrow services related to the acquisition of a life insurance policy pursuant to a viatical settlement contract. "Escrow agent" does not include any person associated or affiliated with or under the control of a licensee.
    "Financial institution" means a financial institution as defined by the Financial Institutions Insurance Sales Law in Article XLIV of the Illinois Insurance Code.
    "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 an entity that has a direct ownership in a policy that is the subject of a viatical settlement contract, and to which both of the following apply:
        (1) its principal activity related to the transaction
     is providing funds to effect the viatical settlement or purchase of one or more viaticated policies; and
        (2) it has an agreement in writing with one or more
     licensed viatical settlement providers to finance the acquisition of viatical settlement contracts.
"Financing entity" does not include an investor that is not
     an accredited investor.
    "Financing transaction" means a transaction in which a viatical settlement provider obtains financing from a financing entity, including, without limitation, any secured or unsecured financing, securitization transaction, or securities offering that either is registered or exempt from registration under federal and State securities law.
    "Foreign licensee" means any viatical settlement provider incorporated or organized under the laws of any state of the United States other than this State.
    "Insurance producer" means an insurance producer as
     defined by Section 10 of Article XXXI of the Illinois Insurance Code.
    "Licensee" means a viatical settlement provider or viatical settlement broker.
    "Life expectancy provider" means a person who determines or holds himself or herself out as determining life expectancies or mortality ratings used to determine life expectancies on behalf of or in connection with any of the following:
        (1) A viatical settlement provider, viatical
     settlement broker, or person engaged in the business of viatical settlements.
        (2) A viatical investment as defined by Section 2.33
     of the Illinois Securities Law of 1953 or a viatical settlement contract.
    "NAIC" means the National Association of Insurance Commissioners.
    "Person" means an individual or a legal entity,
     including, without limitation, a partnership, limited liability company, limited liability partnership, association, trust, business trust, or corporation.
    "Policy" means an individual or group policy, group
     certificate, contract, or arrangement of insurance of the class defined by subsection (a) of Section 4 of the Illinois Insurance Code owned by a resident of this State, regardless of whether delivered or issued for delivery in this State.
    "Qualified institutional buyer" means a qualified institutional buyer as defined in Rule 144 promulgated under the Securities Act of 1933, as amended.
    "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 Director as if those records and files were maintained directly by the licensed viatical settlement provider.
    "Special purpose entity" means a corporation,
     partnership, trust, limited liability company, or other similar entity formed only to provide, directly or indirectly, access to institutional capital markets (i) for a financing entity or licensed viatical settlement provider; or (ii) in connection with a transaction in which the securities in the special purposes entity are acquired by the viator or by qualified institutional buyers or the securities pay a fixed rate of return commensurate with established asset‑backed institutional capital markets.
    "Stranger‑originated life insurance" or "STOLI" means an act, practice, or arrangement 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 or itself and where, at the time of policy inception, there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy or policy benefits to a third party. Trusts created to give the appearance of an insurable interest and used to initiate policies for investors violate insurance interest laws and the prohibition against wagering on life. STOLI arrangements do not include lawful viatical settlement contracts as permitted by this Act.
    "Terminally ill" means certified by a physician as having
     an illness or physical condition that reasonably is expected to result in death in 24 months or less.
    "Viatical settlement broker" means a licensed insurance producer who has been issued a license pursuant to Section 500‑35(a)(1) or 500‑35(a)(2) of the Insurance Code who, working exclusively on behalf of a viator and for a fee, commission, or other valuable consideration, offers, solicits, promotes, or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers or one or more viatical settlement brokers. "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.
    "Viatical settlement contract" means any of the following:
        (1) A written agreement between a viator and a
     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.
        (2) A written agreement for a loan or other lending
     transaction, secured primarily by an individual life insurance policy or an individual certificate of a group life insurance policy.
        (3) The transfer for compensation or value of
     ownership of a 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 contracts and the life insurance contract insures the life of a person residing in this State.
        (4) 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 in either of the following situations:
            (A) The viator or the insured receives a
         guarantee of the viatical settlement value of the policy.
            (B) The viator or the insured agrees to sell the
         policy or any portion of the policy's death benefit on any date before or after issuance of the policy.
    "Viatical settlement contract" does not include any of the following acts, practices, or arrangements listed below in subparagraphs (a) through (i) of this definition of "viatical settlement contract", unless part of a plan, scheme, device, or artifice to avoid application of this Act; provided, however, that the list of excluded items contained in subparagraphs (a) through (i) is not intended to be an exhaustive list and that an act, practice, or arrangement that is not described below in subparagraphs (a) through (i) does not necessarily constitute a viatical settlement contract:
        (a) A policy loan or accelerated death benefit made
     by the insurer pursuant to the policy's terms;
        (b) Loan proceeds that are used solely to pay: (i)
     premiums for the policy and (ii) 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;
        (c) A loan made by a bank or other 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 the default is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this Act;
        (d) A loan made by a lender that does not violate
     Article XXXIIa of the Illinois Insurance Code, provided that the premium finance loan is not described in this Act;
        (e) An agreement in which all the parties (i) are
     closely related to the insured by blood or law or (ii) have a lawful substantial economic interest in the continued life, health, and bodily safety of the person insured, or trusts established primarily for the benefit of such parties;
        (f) 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;
        (g) A bona fide business succession planning
     arrangement: (i) 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; (ii) 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 (iii) 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;
        (h) 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
        (i) Any other contract, transaction, or arrangement
     exempted from the definition of viatical settlement contract by the Director based on the Director's determination that the contract, transaction, or arrangement is not of the type intended to be regulated by this Act.
    "Viatical settlement investment agent" means a person who is an appointed or contracted agent of a licensed viatical settlement provider who solicits or arranges the funding for the purchase of a viatical settlement by a viatical settlement purchaser and who is acting on behalf of a viatical settlement provider. A viatical settlement investment agent is deemed to represent the viatical settlement provider of whom the viatical settlement investment agent is an appointed or contracted agent.
    "Viatical settlement provider" means a person, other than
     a viator, who enters into or effectuates a viatical settlement contract with a viator. "Viatical settlement provider" does not include:
        (1) a bank, savings bank, savings and loan
     association, credit union, or other financial institution that takes an assignment of a policy as collateral for a loan;
        (2) a financial institution or premium finance
     company making premium finance loans and exempted by the Director from the licensing requirement under the premium finance laws where the institution or company takes an assignment of a life insurance policy solely as collateral for a premium finance loan;
        (3) the issuer of the life insurance policy;
        (4) 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;
        (5) An individual person who enters into or
     effectuates no more than one viatical settlement contract in a calendar year for the transfer of policies for any value less than the expected death benefit;
        (6) a financing entity;
        (7) a special purpose entity;
        (8) a related provider trust;
        (9) a viatical settlement purchaser; or
        (10) any other person that the Director determines is
     consistent with the definition of viatical settlement provider.
    "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, in each case where such policy 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 Act; (ii) an accredited investor or qualified institutional buyer; (iii) a financing entity; (iv) a special purpose entity; or (v) a related provider trust.
    "Viaticated policy" means a 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 Act, a viator 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. "Viator" does not include:
        (1) a licensee;
        (2) a qualified institutional buyer;
        (3) a financing entity;
        (4) a special purpose entity; or
        (5) a related provider trust.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/10)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 10. License and bond requirements.
    (a) A person shall not operate as a viatical settlement provider or viatical settlement broker without first obtaining a license from the chief insurance regulatory official of the state of residence of the viator. A viatical settlement provider transacting business in this State shall provide written notice to the Director that it is engaged in such business not less than 30 days prior to the effective date of this Act. Viatical settlement providers shall apply for licensing annually thereafter in a form and manner as prescribed by this Act.
    (b) A person shall not operate as a viatical settlement broker without first obtaining an insurance producer license from the Director and completing the viatical settlement broker training requirements as provided by Section 11 of this Act.
    (c) An insurance producer shall not operate as a viatical settlement broker unless the producer has been duly licensed as a resident insurance producer with a life line of authority in this State or the insurance producer's home state for at least one year.
    (d) Before operating as a viatical settlement broker, the insurance producer, including a business entity licensed in this State as an insurance producer, shall notify the Director that the insurance producer is acting as a viatical settlement broker on a form prescribed by the Director, and shall pay a $500 registration fee which shall be deposited into the Insurance Producer Administration Fund. Notification shall include an acknowledgement by the insurance producer that he or she will operate as a viatical settlement broker in accordance with this Act.
    If a business entity with an insurance producer license registers as a viatical settlement broker, then that registration authorizes all partners, officers, members, and designated employees to act as viatical settlement brokers. All persons acting as viatical settlement brokers pursuant to such a registration shall be named in the application and any supplements to the application.
    (e) A duly licensed resident insurance producer with a life product line or authority in this State or the insurance producer's home state for at least one year, lawfully transacting business as a viatical settlement broker prior to the effective date of this Act may continue to do so, pending receipt by the Director of the notice required by subsection (d) of this Section, provided that the notice is received by the Director no later than 30 days after the effective date of this Act.
    (f) A person licensed as an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator, whose compensation is not paid directly or indirectly by the viatical settlement provider, may negotiate viatical settlement contracts on behalf of the viator without having to obtain a license as a viatical settlement broker.
    (g) A person shall not operate as a viatical settlement provider without first obtaining a license from the Director.
    (h) Application for a viatical settlement provider license shall be made to the Director by the applicant on a form prescribed by the Director. The applications shall be accompanied by a $3,000 fee, which shall be deposited into the Insurance Producer Administration Fund.
    (i) Viatical settlement provider licenses may be renewed from year to year on the anniversary date upon payment of the annual renewal fee of $1,500. Failure to pay the fees by the renewal date results in expiration of the license.
    (j) The applicant for a viatical settlement provider license shall provide information on forms required by the Director. The Director shall have authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers, members, and employees, and the Director may, in the exercise of the Director's discretion, refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner, or member thereof who may materially influence the applicant's conduct meets the standards of this Act.
    A viatical settlement provider license issued to a legal entity authorizes all partners, officers, members, and designated employees to act as viatical settlement providers, as applicable, under the license, and all those persons shall be named in the application and any supplements to the application.
    (k) Upon the filing of a viatical settlement provider license application and the payment of the license fee, the Director shall make an investigation of each applicant and issue a license if the Director finds that the applicant:
        (1) has provided a detailed plan of operation;
        (2) is competent and trustworthy and intends to act
     in good faith in the capacity involved by the license applied for;
        (3) has a good business reputation and has had
     experience, training, or education so as to be qualified in the business for which the license is applied for;
        (4) (A) has demonstrated evidence of financial
     responsibility in a format prescribed by the Director through either a surety bond executed and issued by an insurer authorized to issue surety bonds in this State or a deposit of cash, certificates of deposit or securities or any combination thereof, or irrevocable letter of credit in the amount of $125,000;
            (B) the Director may ask for evidence of
         financial responsibility at any time the Director deems necessary;
            (C) any surety bond issued pursuant to this
         subsection (k) shall be in the favor of this State and shall specifically authorize recovery by the Director on behalf of any person in this State who sustained damages as the result of erroneous acts, failure to act, conviction of fraud or conviction of unfair practices by the viatical settlement provider;
            (D) notwithstanding any other provision of this
         Section to the contrary, the Director shall accept, as evidence of financial responsibility, proof that financial instruments in accordance with the requirements in this subsection (k) have been filed with one or more states where the applicant is licensed as a viatical settlement provider;
        (5) if a legal entity, provides a certificate of good
     standing from the state of its domicile; and
        (6) has provided an anti‑fraud plan that meets the
     requirements of Section 65 of this Act.
    (l) The Director shall not issue a viatical settlement
     provider license to a nonresident applicant unless a written designation of an agent for service of process is filed and maintained with the Director or the applicant has filed with the Director the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the Director.
    (m) An applicant for a viatical settlement provider license shall provide all information requested by the Director. The Director may, at any time, require the applicant to fully disclose the identity of all stockholders, partners, officers, members, and employees of the viatical settlement provider, and the Director may refuse to issue a license to an applicant that is not an individual if the Director is not satisfied that each stockholder, partner, officer, member, and employee who may materially influence the applicant's conduct meets the standards set forth in this Act. The Director may also require the applicant to disclose the method the applicant will use to determine and receive life expectancies, the applicant's intended use of life expectancies, and a written plan containing policies and procedures to use when determining life expectancies.
    (n) A viatical settlement provider shall provide to the
     Director new or revised information about officers, 10% or more stockholders, partners, directors, members, or designated employees within 30 days after the change.
    (o) Viatical settlement providers licensed under the Viatical Settlements Act as of the effective date of this amendatory Act of the 96th General Assembly shall be deemed licensed under this Act. All such providers are required to maintain or come into compliance with all of the license requirements of this Act and to provide evidence to the Director that they are in compliance with item (4) of subsection (k) of this Section, concerning financial responsibility; item (6) of subsection (k) of this Section, concerning an anti‑fraud plan; and subsection (m) of this Section, concerning life expectancies no later than the effective date of this Act. Such providers shall not be exempt from the requirements for viatical settlement provider license renewal set forth in subsection (i) of this Section. The first anniversary date for the purpose of license renewal under subsection (i) shall be one year from the effective date of this amendatory Act of the 96th General Assembly.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/11)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 11. Viatical settlement broker training requirements.
    (a) Viatical settlement broker training shall be required as follows:
        (1) An individual may not sell, solicit, or negotiate
     viatical settlement contracts unless the individual is licensed as a life insurance producer or viatical settlement broker and has completed a one‑time training course. The training shall meet the requirements set forth in subsection (b) of this Section.
        (2) An individual already licensed and selling,
     soliciting, or negotiating viatical settlement contracts on the effective date of this Act may not continue to sell, solicit, or negotiate viatical settlement contracts unless the individual has completed a one‑time training course, as set forth in subsection (b) of this Section, within 6 months after the effective date of this Act or within 6 months after availability of the training course, whichever is later.
        (3) In addition to the one‑time training course
     required under items (1) and (2) of this subsection (a), an individual who sells, solicits, or negotiates viatical settlement contracts shall complete ongoing training as set forth in subsection (b) of this Section.
        (4) The training requirements of subsection (b) of
     this Section may be approved as continuing education courses under Section 500‑35(b)(1) of the Illinois Insurance Code.
    (b) Minimum education and training shall be required as follows:
        (1) The one‑time training required by this Section
     shall be no less than 4 hours and the ongoing training required by this Section shall be no less than 4 hours over a 24‑month period.
        (2) The training required under item (1) of this
     subsection (b) shall consist of topics related to viatical settlement contracts, including, but not limited to:
            (A) State and federal laws and regulations
         regarding viatical settlement transactions;
            (B) potential tax implications for participants
         in viatical settlement contracts;
            (C) potential impact on public benefits payments
         to viatical settlement participants;
            (D) alternatives to viatical settlement
         contracts; and
            (E) consumer suitability standards and guidelines.
        (3) The training required by this Section shall not
     include training that is specific to or that includes any sales or marketing information, materials, or training of any company, other than those required by State or federal law.
    (c) Viatical settlement providers shall provide verification of training as follows:
        (1) Viatical settlement providers subject to this Act
     shall obtain verification that a producer receives training required by subsection (a) of this Section before a producer is permitted to sell, solicit, or negotiate viatical settlement contracts. Viatical settlement providers shall maintain records for verification subject to the State's record retention requirements and make the verification available to the Director upon request.
        (2) Viatical settlement providers subject to this Act
     shall maintain records with respect to the training of viatical settlement brokers with whom the provider contracts or otherwise engages in viatical settlement transactions. These records shall be maintained in accordance with the State's record retention requirements and shall be made available to the Director upon request.
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State Codes and Statutes

State Codes and Statutes

Statutes > Illinois > Chapter215 > 3153

    (215 ILCS 159/1)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 1. Short title. This Act may be cited as the Viatical Settlements Act of 2009.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/5)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 5. Definitions.
    "Accredited investor" means an accredited investor as defined in Rule 501(a) promulgated under the Securities Act of 1933 (15 U.S.C. 77 et seq.), as amended.
    "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, digital picture slides, motion pictures, and videos published, disseminated, circulated, or placed 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 policy pursuant to a viatical settlement contract.
    "Alien licensee" means a licensee incorporated or organized under the laws of any country other than the United States.
    "Business of viatical settlements" means any activity involved in, but not limited to, the offering, soliciting, negotiating, procuring, effectuating, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, or hypothecating or in any other manner acquiring an interest in a life insurance policy by means of a viatical settlement contract or other agreement.
    "Chronically ill" means having been certified within the
     preceding 12‑month period by a licensed health professional as:
        (1) being unable to perform, without substantial
     assistance from another individual and for at least 90 days due to a loss of functional capacity, at least 2 activities of daily living, including, but not limited to, eating, toileting, transferring, bathing, dressing, or continence;
        (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 paragraph (1) as determined by the Secretary of Health and Human Services.
    "Controlling person" means any person, firm, association, or corporation that directly or indirectly has the power to direct or cause to be directed the management, control, or activities of the viatical settlement provider.
    "Director" means the Director of the Division of Insurance of the Department of Financial and Professional Regulation.
    "Division" means the Division of Insurance of the Department of Financial and Professional Regulation.
    "Escrow agent" means an independent third‑party person who, pursuant to a written agreement signed by the viatical settlement provider and viator, provides escrow services related to the acquisition of a life insurance policy pursuant to a viatical settlement contract. "Escrow agent" does not include any person associated or affiliated with or under the control of a licensee.
    "Financial institution" means a financial institution as defined by the Financial Institutions Insurance Sales Law in Article XLIV of the Illinois Insurance Code.
    "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 an entity that has a direct ownership in a policy that is the subject of a viatical settlement contract, and to which both of the following apply:
        (1) its principal activity related to the transaction
     is providing funds to effect the viatical settlement or purchase of one or more viaticated policies; and
        (2) it has an agreement in writing with one or more
     licensed viatical settlement providers to finance the acquisition of viatical settlement contracts.
"Financing entity" does not include an investor that is not
     an accredited investor.
    "Financing transaction" means a transaction in which a viatical settlement provider obtains financing from a financing entity, including, without limitation, any secured or unsecured financing, securitization transaction, or securities offering that either is registered or exempt from registration under federal and State securities law.
    "Foreign licensee" means any viatical settlement provider incorporated or organized under the laws of any state of the United States other than this State.
    "Insurance producer" means an insurance producer as
     defined by Section 10 of Article XXXI of the Illinois Insurance Code.
    "Licensee" means a viatical settlement provider or viatical settlement broker.
    "Life expectancy provider" means a person who determines or holds himself or herself out as determining life expectancies or mortality ratings used to determine life expectancies on behalf of or in connection with any of the following:
        (1) A viatical settlement provider, viatical
     settlement broker, or person engaged in the business of viatical settlements.
        (2) A viatical investment as defined by Section 2.33
     of the Illinois Securities Law of 1953 or a viatical settlement contract.
    "NAIC" means the National Association of Insurance Commissioners.
    "Person" means an individual or a legal entity,
     including, without limitation, a partnership, limited liability company, limited liability partnership, association, trust, business trust, or corporation.
    "Policy" means an individual or group policy, group
     certificate, contract, or arrangement of insurance of the class defined by subsection (a) of Section 4 of the Illinois Insurance Code owned by a resident of this State, regardless of whether delivered or issued for delivery in this State.
    "Qualified institutional buyer" means a qualified institutional buyer as defined in Rule 144 promulgated under the Securities Act of 1933, as amended.
    "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 Director as if those records and files were maintained directly by the licensed viatical settlement provider.
    "Special purpose entity" means a corporation,
     partnership, trust, limited liability company, or other similar entity formed only to provide, directly or indirectly, access to institutional capital markets (i) for a financing entity or licensed viatical settlement provider; or (ii) in connection with a transaction in which the securities in the special purposes entity are acquired by the viator or by qualified institutional buyers or the securities pay a fixed rate of return commensurate with established asset‑backed institutional capital markets.
    "Stranger‑originated life insurance" or "STOLI" means an act, practice, or arrangement 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 or itself and where, at the time of policy inception, there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy or policy benefits to a third party. Trusts created to give the appearance of an insurable interest and used to initiate policies for investors violate insurance interest laws and the prohibition against wagering on life. STOLI arrangements do not include lawful viatical settlement contracts as permitted by this Act.
    "Terminally ill" means certified by a physician as having
     an illness or physical condition that reasonably is expected to result in death in 24 months or less.
    "Viatical settlement broker" means a licensed insurance producer who has been issued a license pursuant to Section 500‑35(a)(1) or 500‑35(a)(2) of the Insurance Code who, working exclusively on behalf of a viator and for a fee, commission, or other valuable consideration, offers, solicits, promotes, or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers or one or more viatical settlement brokers. "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.
    "Viatical settlement contract" means any of the following:
        (1) A written agreement between a viator and a
     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.
        (2) A written agreement for a loan or other lending
     transaction, secured primarily by an individual life insurance policy or an individual certificate of a group life insurance policy.
        (3) The transfer for compensation or value of
     ownership of a 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 contracts and the life insurance contract insures the life of a person residing in this State.
        (4) 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 in either of the following situations:
            (A) The viator or the insured receives a
         guarantee of the viatical settlement value of the policy.
            (B) The viator or the insured agrees to sell the
         policy or any portion of the policy's death benefit on any date before or after issuance of the policy.
    "Viatical settlement contract" does not include any of the following acts, practices, or arrangements listed below in subparagraphs (a) through (i) of this definition of "viatical settlement contract", unless part of a plan, scheme, device, or artifice to avoid application of this Act; provided, however, that the list of excluded items contained in subparagraphs (a) through (i) is not intended to be an exhaustive list and that an act, practice, or arrangement that is not described below in subparagraphs (a) through (i) does not necessarily constitute a viatical settlement contract:
        (a) A policy loan or accelerated death benefit made
     by the insurer pursuant to the policy's terms;
        (b) Loan proceeds that are used solely to pay: (i)
     premiums for the policy and (ii) 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;
        (c) A loan made by a bank or other 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 the default is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this Act;
        (d) A loan made by a lender that does not violate
     Article XXXIIa of the Illinois Insurance Code, provided that the premium finance loan is not described in this Act;
        (e) An agreement in which all the parties (i) are
     closely related to the insured by blood or law or (ii) have a lawful substantial economic interest in the continued life, health, and bodily safety of the person insured, or trusts established primarily for the benefit of such parties;
        (f) 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;
        (g) A bona fide business succession planning
     arrangement: (i) 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; (ii) 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 (iii) 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;
        (h) 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
        (i) Any other contract, transaction, or arrangement
     exempted from the definition of viatical settlement contract by the Director based on the Director's determination that the contract, transaction, or arrangement is not of the type intended to be regulated by this Act.
    "Viatical settlement investment agent" means a person who is an appointed or contracted agent of a licensed viatical settlement provider who solicits or arranges the funding for the purchase of a viatical settlement by a viatical settlement purchaser and who is acting on behalf of a viatical settlement provider. A viatical settlement investment agent is deemed to represent the viatical settlement provider of whom the viatical settlement investment agent is an appointed or contracted agent.
    "Viatical settlement provider" means a person, other than
     a viator, who enters into or effectuates a viatical settlement contract with a viator. "Viatical settlement provider" does not include:
        (1) a bank, savings bank, savings and loan
     association, credit union, or other financial institution that takes an assignment of a policy as collateral for a loan;
        (2) a financial institution or premium finance
     company making premium finance loans and exempted by the Director from the licensing requirement under the premium finance laws where the institution or company takes an assignment of a life insurance policy solely as collateral for a premium finance loan;
        (3) the issuer of the life insurance policy;
        (4) 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;
        (5) An individual person who enters into or
     effectuates no more than one viatical settlement contract in a calendar year for the transfer of policies for any value less than the expected death benefit;
        (6) a financing entity;
        (7) a special purpose entity;
        (8) a related provider trust;
        (9) a viatical settlement purchaser; or
        (10) any other person that the Director determines is
     consistent with the definition of viatical settlement provider.
    "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, in each case where such policy 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 Act; (ii) an accredited investor or qualified institutional buyer; (iii) a financing entity; (iv) a special purpose entity; or (v) a related provider trust.
    "Viaticated policy" means a 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 Act, a viator 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. "Viator" does not include:
        (1) a licensee;
        (2) a qualified institutional buyer;
        (3) a financing entity;
        (4) a special purpose entity; or
        (5) a related provider trust.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/10)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 10. License and bond requirements.
    (a) A person shall not operate as a viatical settlement provider or viatical settlement broker without first obtaining a license from the chief insurance regulatory official of the state of residence of the viator. A viatical settlement provider transacting business in this State shall provide written notice to the Director that it is engaged in such business not less than 30 days prior to the effective date of this Act. Viatical settlement providers shall apply for licensing annually thereafter in a form and manner as prescribed by this Act.
    (b) A person shall not operate as a viatical settlement broker without first obtaining an insurance producer license from the Director and completing the viatical settlement broker training requirements as provided by Section 11 of this Act.
    (c) An insurance producer shall not operate as a viatical settlement broker unless the producer has been duly licensed as a resident insurance producer with a life line of authority in this State or the insurance producer's home state for at least one year.
    (d) Before operating as a viatical settlement broker, the insurance producer, including a business entity licensed in this State as an insurance producer, shall notify the Director that the insurance producer is acting as a viatical settlement broker on a form prescribed by the Director, and shall pay a $500 registration fee which shall be deposited into the Insurance Producer Administration Fund. Notification shall include an acknowledgement by the insurance producer that he or she will operate as a viatical settlement broker in accordance with this Act.
    If a business entity with an insurance producer license registers as a viatical settlement broker, then that registration authorizes all partners, officers, members, and designated employees to act as viatical settlement brokers. All persons acting as viatical settlement brokers pursuant to such a registration shall be named in the application and any supplements to the application.
    (e) A duly licensed resident insurance producer with a life product line or authority in this State or the insurance producer's home state for at least one year, lawfully transacting business as a viatical settlement broker prior to the effective date of this Act may continue to do so, pending receipt by the Director of the notice required by subsection (d) of this Section, provided that the notice is received by the Director no later than 30 days after the effective date of this Act.
    (f) A person licensed as an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator, whose compensation is not paid directly or indirectly by the viatical settlement provider, may negotiate viatical settlement contracts on behalf of the viator without having to obtain a license as a viatical settlement broker.
    (g) A person shall not operate as a viatical settlement provider without first obtaining a license from the Director.
    (h) Application for a viatical settlement provider license shall be made to the Director by the applicant on a form prescribed by the Director. The applications shall be accompanied by a $3,000 fee, which shall be deposited into the Insurance Producer Administration Fund.
    (i) Viatical settlement provider licenses may be renewed from year to year on the anniversary date upon payment of the annual renewal fee of $1,500. Failure to pay the fees by the renewal date results in expiration of the license.
    (j) The applicant for a viatical settlement provider license shall provide information on forms required by the Director. The Director shall have authority, at any time, to require the applicant to fully disclose the identity of all stockholders, partners, officers, members, and employees, and the Director may, in the exercise of the Director's discretion, refuse to issue a license in the name of a legal entity if not satisfied that any officer, employee, stockholder, partner, or member thereof who may materially influence the applicant's conduct meets the standards of this Act.
    A viatical settlement provider license issued to a legal entity authorizes all partners, officers, members, and designated employees to act as viatical settlement providers, as applicable, under the license, and all those persons shall be named in the application and any supplements to the application.
    (k) Upon the filing of a viatical settlement provider license application and the payment of the license fee, the Director shall make an investigation of each applicant and issue a license if the Director finds that the applicant:
        (1) has provided a detailed plan of operation;
        (2) is competent and trustworthy and intends to act
     in good faith in the capacity involved by the license applied for;
        (3) has a good business reputation and has had
     experience, training, or education so as to be qualified in the business for which the license is applied for;
        (4) (A) has demonstrated evidence of financial
     responsibility in a format prescribed by the Director through either a surety bond executed and issued by an insurer authorized to issue surety bonds in this State or a deposit of cash, certificates of deposit or securities or any combination thereof, or irrevocable letter of credit in the amount of $125,000;
            (B) the Director may ask for evidence of
         financial responsibility at any time the Director deems necessary;
            (C) any surety bond issued pursuant to this
         subsection (k) shall be in the favor of this State and shall specifically authorize recovery by the Director on behalf of any person in this State who sustained damages as the result of erroneous acts, failure to act, conviction of fraud or conviction of unfair practices by the viatical settlement provider;
            (D) notwithstanding any other provision of this
         Section to the contrary, the Director shall accept, as evidence of financial responsibility, proof that financial instruments in accordance with the requirements in this subsection (k) have been filed with one or more states where the applicant is licensed as a viatical settlement provider;
        (5) if a legal entity, provides a certificate of good
     standing from the state of its domicile; and
        (6) has provided an anti‑fraud plan that meets the
     requirements of Section 65 of this Act.
    (l) The Director shall not issue a viatical settlement
     provider license to a nonresident applicant unless a written designation of an agent for service of process is filed and maintained with the Director or the applicant has filed with the Director the applicant's written irrevocable consent that any action against the applicant may be commenced against the applicant by service of process on the Director.
    (m) An applicant for a viatical settlement provider license shall provide all information requested by the Director. The Director may, at any time, require the applicant to fully disclose the identity of all stockholders, partners, officers, members, and employees of the viatical settlement provider, and the Director may refuse to issue a license to an applicant that is not an individual if the Director is not satisfied that each stockholder, partner, officer, member, and employee who may materially influence the applicant's conduct meets the standards set forth in this Act. The Director may also require the applicant to disclose the method the applicant will use to determine and receive life expectancies, the applicant's intended use of life expectancies, and a written plan containing policies and procedures to use when determining life expectancies.
    (n) A viatical settlement provider shall provide to the
     Director new or revised information about officers, 10% or more stockholders, partners, directors, members, or designated employees within 30 days after the change.
    (o) Viatical settlement providers licensed under the Viatical Settlements Act as of the effective date of this amendatory Act of the 96th General Assembly shall be deemed licensed under this Act. All such providers are required to maintain or come into compliance with all of the license requirements of this Act and to provide evidence to the Director that they are in compliance with item (4) of subsection (k) of this Section, concerning financial responsibility; item (6) of subsection (k) of this Section, concerning an anti‑fraud plan; and subsection (m) of this Section, concerning life expectancies no later than the effective date of this Act. Such providers shall not be exempt from the requirements for viatical settlement provider license renewal set forth in subsection (i) of this Section. The first anniversary date for the purpose of license renewal under subsection (i) shall be one year from the effective date of this amendatory Act of the 96th General Assembly.
(Source: P.A. 96‑736, eff. 7‑1‑10.)

    (215 ILCS 159/11)
    (This Section may contain text from a Public Act with a delayed effective date)
    Sec. 11. Viatical settlement broker training requirements.
    (a) Viatical settlement broker training shall be required as follows:
        (1) An individual may not sell, solicit, or negotiate
     viatical settlement contracts unless the individual is licensed as a life insurance producer or viatical settlement broker and has completed a one‑time training course. The training shall meet the requirements set forth in subsection (b) of this Section.
        (2) An individual already licensed and selling,
     soliciting, or negotiating viatical settlement contracts on the effective date of this Act may not continue to sell, solicit, or negotiate viatical settlement contracts unless the individual has completed a one‑time training course, as set forth in subsection (b) of this Section, within 6 months after the effective date of this Act or within 6 months after availability of the training course, whichever is later.
        (3) In addition to the one‑time training course
     required under items (1) and (2) of this subsection (a), an individual who sells, solicits, or negotiates viatical settlement contracts shall complete ongoing training as set forth in subsection (b) of this Section.
        (4) The training requirements of subsection (b) of
     this Section may be approved as continuing education courses under Section 500‑35(b)(1) of the Illinois Insurance Code.
    (b) Minimum education and training shall be required as follows:
        (1) The one‑time training required by this Section
     shall be no less than 4 hours and the ongoing training required by this Section shall be no less than 4 hours over a 24‑month period.
        (2) The training required under item (1) of this
     subsection (b) shall consist of topics related to viatical settlement contracts, including, but not limited to:
            (A) State and federal laws and regulations
         regarding viatical settlement transactions;
            (B) potential tax implications for participants
         in viatical settlement contracts;
            (C) potential impact on public benefits payments
         to viatical settlement participants;
            (D) alternatives to viatical settlement
         contracts; and
            (E) consumer suitability standards and guidelines.
        (3) The training required by this Section shall not
     include training that is specific to or that includes any sales or marketing information, materials, or training of any company, other than those required by State or federal law.
    (c) Viatical settlement providers shall provide verification of training as follows:
        (1) Viatical settlement providers subject to this Act
     shall obtain verification that a producer receives training required by subsection (a) of this Section before a producer is permitted to sell, solicit, or negotiate viatical settlement contracts. Viatical settlement providers shall maintain records for verification subject to the State's record retention requirements and make the verification available to the Director upon request.
        (2) Viatical settlement providers subject to this Act
     shall maintain records with respect to the training of viatical settlement brokers with whom the provider contracts or otherwise engages in viatical settlement transactions. These records shall be maintained in accordance with the State's record retention requirements and shall be made available to the Director upon request.