Terms Used In Rhode Island General Laws > Chapter 27-72 - Life Settlements Act

• Advertisement: means any written, electronic or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet or similar communications media, including film strips, motion pictures and videos, published, disseminated, circulated or placed before the public, directly or indirectly, for the purpose of creating an interest in or inducing a person to purchase or sell, assign, devise, bequest or transfer the death benefit or ownership of a life insurance policy or an interest in a life insurance policy pursuant to a life settlement contract. See Rhode Island General Laws 27-72-2
• Allegation: something that someone says happened.
• Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
• Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
• Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. ^{Source: OCC}
• Bequest: Property gifted by will.
• Broker: means a person who, on behalf of an owner and for a fee, commission or other valuable consideration, offers or attempts to negotiate life settlement contracts between an owner and provider. See Rhode Island General Laws 27-72-2
• Business of life settlements: means an activity involved in, but not limited to, offering to enter into, soliciting, negotiating, procuring, effectuating, monitoring, or tracking, of life settlement contracts. See Rhode Island General Laws 27-72-2
• Chronically ill: means :

  (i)  Being unable to perform at least two (2) activities of daily living (i. See Rhode Island General Laws 27-72-2

• Commissioner: means the director of the department of business regulation or his or her designee. See Rhode Island General Laws 27-72-2
• Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
• Contract: A legal written agreement that becomes binding when signed.
• Conviction: A judgement of guilt against a criminal defendant.
• Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
• Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
• Devise: To gift property by will.
• Discovery: Lawyers' examination, before trial, of facts and documents in possession of the opponents to help the lawyers prepare for trial.
• Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. ^{Source: OCC}
• Escrow: Money given to a third party to be held for payment until certain conditions are met.
• Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
• Federally regulated entity: means a national bank, thrift, credit union, or any entity registered or exempt from registration under 15 U. See Rhode Island General Laws 27-72-2
• Fiduciary: A trustee, executor, or administrator.
• Financing entity: means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a provider, credit enhancer, or any entity that has a direct ownership in a policy or certificate that is the subject of a life settlement contract, but:

  (i)  Whose principal activity related to the transaction is providing funds to effect the life settlement contract or purchase of one or more policies; and

  (ii)  Who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts. See Rhode Island General Laws 27-72-2

• Financing transaction: means a transaction in which a licensed provider obtains financing from a financing entity including, without limitation, any secured or unsecured financing, any securitization transaction, or any securities offering which either is registered or exempt from registration under federal and state securities law. See Rhode Island General Laws 27-72-2
• Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
  • You are late making a payment or commit some other default, triggering an increase to a penalty rate
  • The bank changes the terms of your account and you do not reject the change.
  • The rate expires (if the rate was fixed for only a certain period of time).
• Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. ^{Source: OCC}
• Fraud: Intentional deception resulting in injury to another.
• Fraudulent life settlement act: includes :

  (i)  Acts or omissions committed by any person who, knowingly and with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits, or permits its employees or its agents to engage in acts including, but not limited to:

  (A)  Presenting, causing to be presented or preparing with knowledge and belief that it will be presented to or by a provider, premium finance lender, broker, insurer, insurance producer or any other person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to one or more of the following:

  (I)  An application for the issuance of a life settlement contract or insurance policy;

  (II)  The underwriting of a life settlement contract or insurance policy;

  (III)  A claim for payment or benefit pursuant to a life settlement contract or insurance policy;

  (IV)  Premiums paid on an insurance policy;

  (V)  Payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or insurance policy;

  (VI)  The reinstatement or conversion of an insurance policy;

  (VII)  In the solicitation, offer to enter into, or effectuation of a life settlement contract, or insurance policy;

  (VIII)  The issuance of written evidence of life settlement contract or insurance;

  (IX)  Any application for or the existence of or any payments related to a loan secured directly or indirectly by any interest in a life insurance policy; or

  (X)  Enter into any practice or plan which involves stranger originated life insurance (STOLI). See Rhode Island General Laws 27-72-2

• in writing: include printing, engraving, lithographing, and photo-lithographing, and all other representations of words in letters of the usual form. See Rhode Island General Laws 43-3-16
• Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
• Insured: means the person covered under the policy being considered for sale in a life settlement contract. See Rhode Island General Laws 27-72-2
• Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
• Life expectancy: means the arithmetic mean of the number of months the insured under the life insurance policy to be settled can be expected to live as determined by a life expectancy company provider, broker, or financing entity considering medical records and appropriate experiential data. See Rhode Island General Laws 27-72-2
• Life insurance producer: means any person licensed in this state as a resident or nonresident insurance producer who has received qualification or authority for life insurance coverage or a life line of coverage pursuant to chapter 2. See Rhode Island General Laws 27-72-2
• Life settlement contract: means a written agreement entered into between a provider and an owner, establishing the terms under which compensation or any thing of value will be paid, which compensation or thing of value is less than the expected death benefit of the insurance policy or certificate, in return for the owner's assignment, transfer, sale, devise or bequest of the death benefit or any portion of an insurance policy or certificate of insurance for compensation; provided, however, that the minimum value for a life settlement contract shall be greater than a cash surrender value or accelerated death benefit available at the time of an application for a life settlement contract. See Rhode Island General Laws 27-72-2
• National Bank: A bank that is subject to the supervision of the Comptroller of the Currency. The Office of the Comptroller of the Currency is a bureau of the U.S. Treasury Department. A national bank can be recognized because it must have "national" or "national association" in its name. ^{Source: OCC}
• Nolo contendere: No contest-has the same effect as a plea of guilty, as far as the criminal sentence is concerned, but may not be considered as an admission of guilt for any other purpose.
• Oath: A promise to tell the truth.
• oath: includes affirmation; the word "sworn" includes affirmed; and the word "engaged" includes either sworn or affirmed. See Rhode Island General Laws 43-3-11
• Owner: means the owner of a life insurance policy or a certificate holder under a group policy, with or without a terminal illness, who enters or seeks to enter into a life settlement contract. See Rhode Island General Laws 27-72-2
• Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
• Person: means any natural person or legal entity including, but not limited to, a partnership, limited liability company, association, trust or corporation. See Rhode Island General Laws 27-72-2
• Policy: means an individual or group policy, group certificate, contract or arrangement of life insurance owned by a resident of this state, regardless of whether delivered or issued for delivery in this state. See Rhode Island General Laws 27-72-2
• Premium finance loan: is a loan made primarily for the purposes of making premium payments on a life insurance policy, which loan is secured by an interest in such life insurance policy. See Rhode Island General Laws 27-72-2
• Prosecute: To charge someone with a crime. A prosecutor tries a criminal case on behalf of the government.
• Provider: means a person, other than an owner, who enters into or effectuates a life settlement contract with an owner, a provider does not include:

  (i)  Any bank, savings bank, savings and loan association, credit union;

  (ii)  A licensed lending institution or creditor or secured party pursuant to a premium finance loan agreement which takes an assignment of a life insurance policy or certificate issued pursuant to a group life insurance policy as collateral for a loan;

  (iii)  The insurer of a life insurance policy or rider to the extent of providing accelerated death benefits or riders or cash surrender value;

  (iv)  Any natural person who enters into or effectuates no more than one agreement in a calendar year for the transfer of a life insurance policy or certificate issued pursuant to a group life insurance policy, for compensation or anything of value less than the expected death benefit payable under the policy;

  (v)  A purchaser;

  (vi)  Any authorized or eligible insurer that provides stop loss coverage to a provider; purchaser, financing entity, special purpose entity, or related provider trust;

  (vii)  A financing entity;

  (viii)  A special purpose entity;

  (ix)  A related provider trust;

  (x)  A broker; or

  (xi)  An accredited investor or qualified institutional buyer as defined; respectively, in regulation D, rule 501 or rule 144A of the Federal Securities Act of 1933, as amended, who purchases a life settlement policy from a provider. See Rhode Island General Laws 27-72-2

• Purchaser: means a person who pays compensation or anything of value as consideration for a beneficial interest in a trust which is vested with, or for the assignment, transfer or sale of, an ownership or other interest in a life insurance policy or a certificate issued pursuant to a group life insurance policy which has been the subject of a life settlement contract. See Rhode Island General Laws 27-72-2
• Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.
• Right of rescission: Right to cancel, within three business days, a contract that uses the home of a person as collateral, except in the case of a first mortgage loan. There is no fee to the borrower, who receives a full refund of all fees paid. The right of rescission is guaranteed by the Truth in Lending Act (TILA). ^{Source: OCC}
• Sequester: To separate. Sometimes juries are sequestered from outside influences during their deliberations.
• Service of process: The service of writs or summonses to the appropriate party.
• Settled policy: means a life insurance policy or certificate that has been acquired by a provider pursuant to a life settlement contract. See Rhode Island General Laws 27-72-2
• Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
• Special purpose entity: means a corporation, partnership, trust, limited liability company, or other legal entity formed solely to provide either directly or indirectly access to institutional capital markets:

  (i)  For a financing entity or provider; or

  (ii)  In connection with a transaction in which the securities in the special purpose entity are acquired by the owner or by a "qualified institutional buyer" as defined in Rule 144 promulgated under the Federal Securities Act of 1933, as amended; or

  (iii)  The securities pay a fixed rate of return commensurate with established asset-backed institutional capital markets. See Rhode Island General Laws 27-72-2

• STOLI: is a practice or plan to initiate a life insurance policy for the benefit of a third-party investor who, at the time of policy origination, has no insurable interest in the insured. See Rhode Island General Laws 27-72-2
• Subpoena: A command to a witness to appear and give testimony.
• Testify: Answer questions in court.
• Testimony: Evidence presented orally by witnesses during trials or before grand juries.
• Tort: A civil wrong or breach of a duty to another person, as outlined by law. A very common tort is negligent operation of a motor vehicle that results in property damage and personal injury in an automobile accident.
• Trust account: A general term that covers all types of accounts in a trust department, such as estates, guardianships, and agencies. ^{Source: OCC}
• Trustee: A person or institution holding and administering property in trust.
• United States: include the several states and the territories of the United States. See Rhode Island General Laws 43-3-8