Terms Used In Hawaii Revised Statutes > Chapter 431C > Part I - General Provisions

• 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 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
• Certificate: means a certificate issued pursuant to a group policy. 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.
• 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.
• Devise: To gift property by will.
• 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:

  (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

• 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 that is either registered or exempt from registration under federal and state securities law. See Hawaii Revised Statutes 431C-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).
• Fraud: Intentional deception resulting in injury to another.
• Insured: means the person covered under the policy being considered for sale in a life settlement contract. See Hawaii Revised Statutes 431C-2
• Life expectancy: means the arithmetic mean of the number of months the insured under the policy to be settled can be expected to live as determined by a life expectancy company considering medical records and appropriate experiential data. 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

• 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.
• 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
• 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 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
• Premium finance loan: means a loan made primarily for the purposes of making premium payments on a policy, which loan is secured by an interest in such policy. 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
• Purchaser: means a person who pays compensation or anything of value as consideration for a beneficial interest in a trust that is vested with, or for the assignment, transfer, or sale of, an ownership or other interest in a policy or a certificate that has been the subject of a life settlement contract. 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
• Service of process: The service of writs or summonses to the appropriate party.
• Settled policy: means a policy or certificate that has been acquired by a provider pursuant to a life settlement contract. 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.
• 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 for a financing entity or provider in connection with a transaction in which the securities in the special purpose entity:

  (1) Are acquired by the owner or by a "qualified institutional buyer" as defined in Rule 144A of the Securities Act of 1933, as amended; or

  (2) Pay a fixed rate of return commensurate with established asset-backed institutional capital markets. See Hawaii Revised Statutes 431C-2