Life Settlement Question
Question: What is stranger-originated life insurance ("STOLI")?
Answer: STOLI is a contrived transaction designed to evade state insurable interest and other laws and allow investors to use life insurance to profit from the deaths of people they don't know. In STOLI schemes, investors entice seniors to take out policies, with the intent
to transfer most of the benefit to those investors who then profit when they die. The sooner the policyholder dies, the greater the investor's profit. In effect, STOLI promotes wagering on human life. Also, STOLI threatens to expose consumers to unexpected taxes, loss of privacy, and inability to obtain needed life insurance in the future.
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