As with all important business transactions, policy owners and insureds must be careful not to be the victim of fraud or to commit fraud in connection with a life settlement. Individual policy owners and insureds are often older individuals who may be particularly vulnerable to fraud schemes. The life settlement industry wants to help older adults avoid such circumstances.
The life settlement industry has observed a particular kind of transaction associated with life insurance policies and wants you to be aware of this. The transaction is known as “Stranger-Originated Life Insurance”, or “STOLI”. STOLI usually involves an older person being approached by a licensed life insurance agent or another party to obtain new life insurance, with the policy being controlled, from the start and paid for by a third party. Some older individuals may even be offered compensation for his or her participation as the insured.
What makes this problematic is that the New York Insurance Law prohibits a person from initiating or facilitating the issuance of an insurance policy for the intended benefit of a person who, at the time when the policy is issued, has no insurable interest in the life of the person being insured.
For More Information Please go to:
LISA New York Public Awareness Campaign