# N.D. Cent. Code § 26.1-33.4-01: 26.1-33.4-01. Definitions > North Dakota · Statutes · In force URL: https://www.frixlaw.com/law-library/statutes/STATE_ND_T26.1_C26.1-33.4_S26.1-33.4-01 ## Section - **Citation:** N.D. Cent. Code § 26.1-33.4-01 - **Heading:** 26.1-33.4-01. Definitions - **Jurisdiction:** North Dakota - **Kind:** Statutes - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** ND Code / Title 26.1 / Chapter 26.1-33.4 / Section 26.1-33.4-01 ## Text 26.1-33.4-01. Definitions As used in this chapter, unless the context requires otherwise: 1. "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 filmstrips, 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. 2. "Broker" means an individual 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. A broker 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. The term does not include an attorney, certified public accountant, or financial planner retained in the type of practice customarily performed in that individual's professional capacity to represent the owner whose compensation is not paid directly or indirectly by the provider or any other person, except the owner. 3. "Business of life settlements" includes an activity involved in offering to enter, soliciting, negotiating, procuring, effectuating, monitoring, or tracking of life settlement contracts. 4. "Chronically ill" means: a. Being unable to perform at least two activities of daily living, such as eating, toileting, transferring, bathing, dressing, or continence; b. Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or c. Having a level of disability similar to that described in subdivision a as determined by the United States secretary of health and human services. 5. "Financing entity" means an underwriter, a placement agent, a lender, a purchaser of securities, a purchaser of a policy or certificate from a provider, a 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 whose principal activity related to the transaction is providing funds to effect the life settlement contract or purchase of one or more policies, and who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts. The term does not include a nonaccredited investor or purchaser. 6. "Financing transaction" means a transaction in which a licensed provider obtains financing from a financing entity, including 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. 7. "Fraudulent life settlement act" includes: a. Any act or omission committed by any person that, knowingly and with intent to defraud, for the purpose of depriving another of property or for pecuniary gain, commits or permits the person's employees or agents to engage in acts, including: (1) 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: (a) An application for the issuance of a life settlement contract or insurance policy; (b) The underwriting of a life settlement contract or insurance policy; 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: (a) An application for the issuance of a life settlement contract or insurance policy; (b) The underwriting of a life settlement contract or insurance policy; (c) A claim for payment or benefit pursuant to a life settlement contract or insurance policy; (d) Premiums paid on an insurance policy; (e) Payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or insurance policy; (f) The reinstatement or conversion of an insurance policy; (g) In the solicitation, offer to enter, or effectuation of a life settlement contract or insurance policy; (h) The issuance of written evidence of life settlement contracts or insurance; (i) Any application for, the existence of, or any payments related to a loan secured directly or indirectly by any interest in a life insurance policy; or (j) Enter into any practice or plan which involves stranger-originated life insurance; (2) Failing to disclose to the insurer where the request for such disclosure has been asked for by the insurer that the prospective insured has undergone a life expectancy evaluation by any individual or entity other than the insurer or the insurer's authorized representatives in connection with the issuance of the policy. (3) Employing any device, scheme, or artifice to defraud in the business of life settlements. (4) In the solicitation, application, or issuance of a life insurance policy, employing any device, scheme, or artifice in violation of state insurable interest laws. b. In the furtherance of a fraud or to prevent the detection of a fraud, any person commits or permits the person's employees or agents to: (1) Remove, conceal, alter, destroy, or sequester from the commissioner the assets or records of a licensee or other person engaged in the business of life settlements; (2) Misrepresent or conceal the financial condition of a licensee, financing entity, insurer, or other person; (3) Transact the business of life settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of life settlements; (4) File with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner; (5) Engage in embezzlement, theft, misappropriation, or conversion of moneys, funds, premiums, credits, or other property of a provider, an insurer, an insured, an owner, an insurance, a policyowner, or any other person engaged in the business of life settlements or insurance; (6) Knowingly and with intent to defraud, enter, broker, or otherwise deal in a life settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the owner or the owner's agent intended to defraud the policy's issuer; (7) Attempt to commit, assist, aid, or abet in the commission of or conspiracy to commit the acts or omissions specified in this subsection; or false information concerning any fact material to the policy or by concealing, for the purpose of misleading another, information concerning any fact material to the policy, where the owner or the owner's agent intended to defraud the policy's issuer; (7) Attempt to commit, assist, aid, or abet in the commission of or conspiracy to commit the acts or omissions specified in this subsection; or (8) Misrepresent the state of residence of an owner to be a state or jurisdiction that does not have a law substantially similar to this chapter for the purpose of evading or avoiding the provisions of this chapter. 8. "Insured" means the individual covered under the policy being considered for sale in a life settlement contract. 9. "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 considering medical records and appropriate experiential data. 10. "Life insurance producer" means any person licensed in this state as a resident or nonresident insurance producer that has received qualification or authority for life insurance coverage or a life line of coverage pursuant to chapter 26.1-26. 11. "Life settlement contract" means a written agreement entered between a provider, or any affiliate of the provider, and an owner establishing the terms under which compensation or anything 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 present or future assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of an insurance policy or certificate of insurance for compensation; provided, however, that the minimum value for a life settlement contract must be greater than a cash surrender value or accelerated death benefit available at the time of an application for a life settlement contract. The term includes the transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns such policy if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more life insurance contracts, which life insurance contract insures the life of an individual residing in this state. a. "Life settlement contract" also includes: (1) A written agreement for a loan or other lending transaction, secured primarily by an individual or group life insurance policy; or (2) A premium finance loan made for a policy on or before the date of issuance of the policy when: (a) 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; (b) The owner receives on the date of the premium finance loan a guarantee of the future life settlement value of the policy; or premium finance loan made for a policy on or before the date of issuance of the policy when: (a) 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; (b) The owner receives on the date of the premium finance loan a guarantee of the future life settlement value of the policy; or (c) The owner agrees on the date of the premium finance loan to sell the policy or any portion of the policy's death benefit on any date following the issuance of the policy. b. "Life settlement contract" does not include: (1) A policy loan by a life insurance company pursuant to the terms of the life insurance policy or accelerated death benefits provisions contained in the life insurance policy, whether issued with the original policy or as a rider; (2) A premium finance loan, as defined herein, or any loan made by a bank or other licensed financial institution, provided that neither default on such loan nor the transfer of the policy in connection with such default is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this chapter; (3) A collateral assignment of a life insurance policy by an owner; (4) A loan made by a lender that does not violate chapter 26.1-20.1, provided the loan is not described in paragraph 1, and is not otherwise within the definition of life settlement contract; (5) An agreement in which all the parties: (a) Are closely related to the insured by blood or law; or (b) Have a lawful substantial economic interest in the continued life, health, and bodily safety of the individual insured, or are trusts established primarily for the benefit of such parties; (6) Any designation, consent, or agreement by an insured who is an employee of an employer in connection with the purchase by the employer, or trust established by the employer, of life insurance on the life of the employee; (7) A bona fide business succession planning arrangement: (a) Between one or more shareholders in a corporation or between a corporation and one or more of the corporation's shareholders or one or more trusts established by the corporation's shareholders; (b) Between one or more partners in a partnership or between a partnership and one or more of the partnership's partners or one or more trusts established by the partnership's partners; or (c) Between one or more members in a limited liability company or between a limited liability company and one or more of the limited liability company's members or one or more trusts established by the limited liability company's members; (8) An agreement entered 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 any and one or more of the limited liability company's members or one or more trusts established by the limited liability company's members; (8) An agreement entered by a service recipient, or a trust established by the service recipient, and a service provider, or a trust established by the service provider, who performs significant services for the service recipient's trade or business; or (9) Any other contract, transaction, or arrangement from the definition of life settlement contract that the commissioner determines is not of the type intended to be regulated by this chapter. 12. "Net death benefit" means the amount of the life insurance policy or certificate to be settled less any outstanding debt or lien. 13. "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 a life settlement contract. For the purposes of this definition, an owner is not limited to an owner of a life insurance 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. The term does not include: a. Any provider or other licensee under this chapter; b. A qualified institutional buyer as defined in rule 144A of the federal Securities Act of 1933, as amended [15 U.S.C. 77a et seq.]; c. A financing entity; d. A special purpose entity; or e. A related provider trust. 14. "Patient identifying information" means an insured's address, telephone number, facsimile number, electronic mail address, photograph or likeness, employer, employment status, social security number, or any other information that is likely to lead to the identification of the insured. 15. "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. 16. "Premium finance loan" means 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. 17. "Provider" means a person, other than an owner, that enters or effectuates a life settlement contract with an owner. The term does not include: a. Any bank, savings bank, savings and loan association, or credit union; b. A licensed lending institution, 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; c. The insurer of a life insurance policy or rider to the extent of providing accelerated death benefits or riders or cash surrender value; d. Any individual who enters 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; e. A purchaser; f. Any authorized or eligible insurer that provides stop-loss coverage to a provider, purchaser, financing entity, special purpose entity, or related provider trust; g. A financing entity; h. A special purpose entity; i. A related provider trust; j. A broker; or k. 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 [15 U.S.C. 77a et seq.], that purchases a life settlement policy from a provider. 18. "Purchased policy" means a policy or group certificate that has been acquired by a provider pursuant to a life settlement contract. 19. "Purchaser" means a person that pays compensation or anything of value as consideration for a beneficial interest in a trust which is vested with, or for the 33, as amended [15 U.S.C. 77a et seq.], that purchases a life settlement policy from a provider. 18. "Purchased policy" means a policy or group certificate that has been acquired by a provider pursuant to a life settlement contract. 19. "Purchaser" means a person that 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. 20. "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. In order to qualify as a related provider trust, the trust must have 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 department as if those records and files were maintained directly by the licensed provider. 21. "Settled policy" means a life insurance policy or certificate that has been acquired by a provider pursuant to a life settlement contract. 22. "Special purpose entity" means an organization formed solely to provide either directly or indirectly access to institutional capital markets for a financing entity or provider; or 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 [15 U.S.C. 77a et seq.]; or the securities pay a fixed rate of return commensurate with established a set-backed institutional capital markets. 23. "Stranger-originated life insurance" is a practice or plan to initiate a life insurance policy for the benefit of a third-party investor that at the time of policy origination has no insurable interest in the insured. Stranger-originated life insurance practices include cases in which life insurance is purchased with resources or guarantees from or through a person that at the time of policy inception could not lawfully initiate the policy on its own, and in which at the time of inception there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy or the policy benefits or both to a third party. Trusts that are created to give the appearance of insurable interest, and are used to initiate policies for investors, violate insurable interest laws and the prohibition against wagering on life. Stranger-originated life insurance arrangements do not include those practices set forth in subdivision b of subsection 11. 24. "Terminally ill" means having an illness or sickness that can reasonably be expected to result in death in twenty-four months or less. ## Nearby sections - [N.D. Cent. Code § 26.1-33.4-01 26.1-33.4-01. 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