State of Florida cracking down on STOLI policies
Now the Florida Office of Insurance Regulation is cracking down.
At least one newspaper ad invited readers to Ruth’s Chris Steakhouse in Palm Beach Gardens. The luncheon was for a “Free Premium Financed Life Insurance & Life Settlement Conference.”
The ad was among the pitches contained in a report released earlier this month by the Florida Office of Insurance Regulation on “Stranger-Originated Life Insurance (STOLI).”
Stranger-Originated Life Insurance sounds like a great deal. Older, high-net-worth seniors are invited to apply for life insurance in exchange for an incentive, such as a cash payment. Often, the investor even pays your premium. But under the agreement, your policy is “sold” to investors, generally complete strangers, after a period, of say, two years. The investor collects the proceeds of the policy upon your death.
The Office of Insurance Regulation contends these types of deals are illegal in Florida and seeks to clarify the law accordingly. Other states have taken or are considering similar action.
