Quarter-Way Through 2009, Still No Signs of STOLI Legislation For California

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Like most other states, California has experienced a spike in stranger-originated life insurance transactions, a relatively recent and emerging phenomenon commonly known as “STOLI.” As the name suggests, STOLI transactions are initiated by a third-party investor who does not have an insurable interest in the insured’s life. The policy’s premiums are funded by the investor, and the insured – usually a wealthy and elderly individual – receives a large cash payment up front in exchange for an agreement to transfer full ownership of the policy to the investor within a short period of time after the policy’s issuance or, in some cases, at the expiration of the policy’s two-year contestability period.

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Published In: General Business Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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