Stranger-Originated Life Insurance ("STOLI")
STOLI is any act, practice, or arrangement, at or prior to policy issuance, to initiate or facilitate the issuance of a life insurance policy for the intended benefit of a person who, at the time of policy origination, does not have an insurable interest in the life of the insured under the laws of the applicable state. This includes an arrangement or other agreement to transfer the ownership of the policy or the policy benefits to another person. The main characteristic of a STOLI arrangement is that insurance is purchased as an investment vehicle, rather than to provide for the insured's beneficiaries. STOLI arrangements also may be called "zero premium life insurance", "no cost to the insured plans", "new issue life settlements", "high net worth settlements", or "non-recourse premium finance transactions".
Insurers may refuse to make payments on STOLI arrangements. Such arrangements circumvent the insurable interest requirement and are illegal in most states. Such an arrangement also may constitute insurance fraud.
Read more about this topic: Life Settlement
Famous quotes containing the words life and/or insurance:
“We’ve only just begun to learn about the water and its secrets, just as we’ve only touched on outer space. We don’t entirely rule out the possibility that there might be some form of life on another planet. Then why not some entirely different form of life in a world we already know is inhabited by millions of living creatures?”
—Harry Essex (b. 1910)
“Women hock their jewels and their husbands’ insurance policies to acquire an unaccustomed shade in hair or crêpe de chine. Why then is it that when anyone commits anything novel in the arts he should be always greeted by this same peevish howl of pain and surprise? One is led to suspect that the interest people show in these much talked of commodities, painting, music, and writing, cannot be very deep or very genuine when they so wince under an unexpected impact.”
—John Dos Passos (1896–1970)