(a) It is unlawful for any person to:

Terms Used In Hawaii Revised Statutes 431C-41

  • 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 providers, represents only the owner, and owes a fiduciary duty to the owner to act according to the owner's instructions, and in the best interest of the owner, notwithstanding the manner in which the broker is compensated. See Hawaii Revised Statutes 431C-2
  • Business of life settlements: means an activity involved in but not limited to offering to enter into the soliciting, negotiating, procuring, effectuating, monitoring, or tracking of life settlement contracts. See Hawaii Revised Statutes 431C-2
  • Commissioner: means the insurance commissioner. See Hawaii Revised Statutes 431C-2
  • Contract: A legal written agreement that becomes binding when signed.
  • 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:

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

    (2) Who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts. See Hawaii Revised Statutes 431C-2

  • Life insurance producer: means any person licensed in this State as a resident or nonresident insurance producer who has received qualification for life insurance pursuant to article 9A of chapter 431. See Hawaii Revised Statutes 431C-2
  • Life settlement contract: means :

    (a)

    (1) 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 owner's policy or certificate, in return for the owner's assignment, transfer, sale, devise, or bequest of the death benefit or any portion of the policy or certificate for compensation, where the minimum value of the contract is greater than a cash surrender value or accelerated death benefit available under the policy or certificate at the time of an application for a life settlement contract;

    (2) The transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns such policy or certificate if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more life insurance contracts, which life insurance contract insures the life of a person residing in this State; or

    (3)

    (A) A written agreement for a loan or other lending transaction, secured primarily by an individual or group policy; or

    (B) A premium finance loan made for a policy on or before the date of issuance of the policy where:

    (i) The loan proceeds are not used solely to pay premiums for the policy and any costs or expenses incurred by the lender or the borrower in connection with the financing;

    (ii) The owner receives on the date of the premium finance loan a guarantee of the future life settlement value of the policy; or

    (iii) The owner agrees on the date of the premium finance loan to sell the policy or any portion of its death benefit on any date following the issuance of the policy. See Hawaii Revised Statutes 431C-2

  • Owner: means the owner of a 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, but shall not be limited to an owner of a policy or a certificate holder under a group policy that insures the life of an individual with a terminal or chronic illness or condition, except where specifically addressed. See Hawaii Revised Statutes 431C-2
  • Person: means any natural person or legal entity, including but not limited to a partnership, limited liability company, association, trust, or corporation. See Hawaii Revised Statutes 431C-2
  • Policy: means an individual or group policy, 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 Hawaii Revised Statutes 431C-2
  • Provider: means a person, other than an owner, who enters into or effectuates a life settlement contract with an owner. See Hawaii Revised Statutes 431C-2
  • Related provider trust: means a titling trust or other trust established by a licensed 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, that includes a written agreement with the licensed provider under which the licensed provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files relating to life settlement transactions available to the insurance division as if those records and files were maintained directly by the licensed provider. See Hawaii Revised Statutes 431C-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.
(1) Enter into a life settlement contract if the person knows or reasonably should have known that the policy was obtained by means of a false, deceptive, or misleading application for such policy;
(2) Engage in any transaction, practice, or course of business if the person knows or reasonably should have known that the intent was to avoid the notice requirements of this chapter;
(3) Engage in any fraudulent act or practice in connection with any transaction relating to any life settlement contract involving an owner who is a resident of this State;
(4) Issue, solicit, market, or otherwise promote the purchase of a policy for the purpose of or with an emphasis on settling the policy;
(5) Enter into a premium finance agreement with any person or agency, or any person affiliated with the person or agency, pursuant to which the person shall receive any proceeds, fees, or other consideration, directly or indirectly, from the policy or owner of the policy or any other person with respect to the premium finance agreement or any life settlement contract or other transaction related to such policy that are in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums pursuant to the premium finance agreement or subsequent sale of such agreement; provided that any payments, charges, fees or other amounts in addition to the amounts required to pay the principal, interest, and service charges related to policy premiums paid under the premium finance agreement shall be remitted to the original owner of the policy or to the owner’s estate if the owner is not living at the time of the determination of the overpayment;
(6) With respect to any policy or life settlement contract and a broker, knowingly solicit an offer from, effectuate a life settlement contract with or make a sale to any provider, financing entity, or related provider trust that is controlling, controlled by, or under common control with such broker;
(7) With respect to any policy or life settlement contract and a provider, knowingly enter into a life settlement contract with an owner, if, in connection with such life settlement contract, anything of value will be paid to a broker that is controlling, controlled by, or under common control with such provider or the financing entity or related provider trust that is involved in such life settlement contract;
(8) With respect to a provider, enter into a life settlement contract unless the life settlement contract promotional, advertising, and marketing materials, as may be prescribed by rule, have been filed with the commissioner. In no event shall any marketing materials expressly reference that the insurance is free for any period of time. The inclusion of any reference in the marketing materials that would cause an owner to reasonably believe that the insurance is free for any period of time shall be considered a violation of this chapter;
(9) With respect to any life insurance producer, insurance company, broker, or provider, make any statement or representation to the applicant or policyholder in connection with the sale or financing of a policy to the effect that the insurance is free or without cost to the policyholder for any period of time unless provided in the policy;
(10) Knowingly and intentionally interfere with the enforcement of the provisions of this chapter or investigations of suspected or actual violations of this chapter; and
(11) With respect to a person in the business of life settlements, knowingly or intentionally permit any person convicted of a felony involving dishonesty or breach of trust to participate in the business of life settlements.
(b) A violation of this section shall be deemed a fraudulent life settlement act.

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