Listen and Learn: The Trouble With STOLI

NAIFA and its colleagues at AALU and ACLI are concerned about the recent rise in popularity of stranger-originated life insurance transactions, known as STOLI. NAIFA's new Advocacy Podcast explains what STOLI is -- and isn’t -- and why these transactions are bad for consumers and our industry.

Podcasts are audio files you can listen to on the NAIFA website or copy to a music player or your computer. NAIFA posts new podcasts on important advocacy issues every month.

In July's podcast, Gary Sanders, NAIFA senior counsel for law and government relations, provides an overview of this complex issue. In STOLI transactions, a promoter or sponsor encourages wealthy, elderly individuals to purchase life insurance policies on their lives, with everybody’s intent being that the insured will sell the policy to investors after the incontestability period expires. The promoter typically arranges for non-recourse premium financing to facilitate the purchase.

While these deals may seem like a win-win situation for everyone involved, Sanders explains some of the numerous causes for concern in the proliferation of STOLI programs.

The word "podcast" is a blend of the words iPod and broadcast, and is simply a method of publishing audio files to the Internet -- you do not need an iPod to listen. These audio files, or "podcasts," are approximately five to eight minutes long and can be automatically played on your computer through NAIFA's website. You can also download these files to any mp3 player or burn them to a CD for future listening.

If this is new to you, simply go to the NAIFA Advocacy Podcast page at www.naifa.org/advocacy/podcasts.cfm to access an FAQ with step-by-step instructions on how to hear the latest legislative and regulatory news.

You can comment on the Advocacy Podcasts in the NAIFA Advocacy Podcasts blog at naifa.typepad.com/advocacy_podcasts.

Back to July 2, 2007, NAIFA Frontline