A Review of Legislation Related to Stranger-Oriented Life Insurance

In recent years, there has been a growing concern regarding a trend in life insurance settlements know as stranger-originated life insurance (STOLI). These transactions, which typically target the elderly, have become a public policy concern for insurers, regulators, and consumers. This article provides a brief discussion of the growth in the secondary life insurance market, including STOLI transactions, and a review of the major issues surrounding these types of transactions. The paper also examines the two model acts developed by the National Association of Insurance Commissioners and the National Conference of Insurance Legislators related to these issues and identifies the states that have adopted some type of legislation designed to prohibit or place restrictions on STOLI transactions. [PUBLICATION ABSTRACT]