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 are laid asleep
In body, and become a living soul:
While with an eye made quiet by the power
Of harmony, and the deep power of joy,
We see into the life of things.”
—William Wordsworth (1770–1850)
“... business training in early life should not be regarded solely as insurance against destitution in the case of an emergency. For from business experience women can gain, too, knowledge of the world and of human beings, which should be of immeasurable value to their marriage careers. Self-discipline, co-operation, adaptability, efficiency, economic management,—if she learns these in her business life she is liable for many less heartbreaks and disappointments in her married life.”
—Hortense Odlum (1892–?)