Which of the following statements is (are)true concerning stranger-owned life insurance (STOLI)?
I.Life insurers welcome the sale of life insurance contracts used in STOLI arrangements.
II.At least one of the investors who purchases the policy must have an insurable interest in the insured.

Question

Quizplus · Accepted Answer

STOLI arrangements are generally not welcomed by life insurers because they involve investors betting on the death of the insured without having a genuine insurable interest. Additionally, for a life insurance contract to be valid, the policy owner must have an insurable interest in the insured at the time of policy inception, which is not the case in STOLI arrangements where investors do not have a direct insurable interest in the life of the insured.

Which of the Following Statements Is (Are)true Concerning Stranger-Owned Life