NAIFA and ACLI Publish STOLI Alert, Volume 2, Issue 2
Issue: Stranger-Originated Life Insurance (STOLI)
Date: May 29, 2008
Action Taken: NAIFA and the American Council of Life Insurers (ACLI) recently published the seventh issue of STOLI Alert. The timing of this issue was planned so that it would be published in conjunction with the National Association of Insurance Commissioner’s (NAIC) 2008 Summer National meeting.
Background: STOLI Alert is a newsletter published periodically by NAIFA and the ACLI to update its readers on recent activity and developments in connection with stranger-originated life insurance (STOLI). STOLI transactions are used by unrelated investors and speculators as a way to circumvent insurable interest laws by initiating life insurance policies on strangers with the intent that the policy-owner will settle the policy after the expiration of the contestability period.
NAIFA’s Position: NAIFA opposes STOLI transactions. STOLI violates the essential social purpose of life insurance, which is protection. Life insurance developed as a means to protect families from the unexpected death of a breadwinner, or businesses from the financial consequences of the death of an owner or key employee. Life insurance was not intended to be used as a vehicle for financial speculation on human life. In effect, STOLI promotes wagering on human life. STOLI also could potentially expose consumers to unexpected taxes, loss of privacy, and inability to obtain needed life insurance in the future.
NAIFA Staff Contact: For additional information, please contact Gary Sanders at GSanders@naifa.org.
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