Washington — Insurance industry associations including the
The legislation was intended to curb abuses of stranger-originated life insurance (STOLI), a misuse of life insurance in which hedge funds and other investors induce senior citizens to purchase life insurance solely to transfer the death benefits to the investors, who hope to profit when the seniors die.
“This transaction serves no social purpose,” the statement reads. “It is simply a get-rich-quick scheme for hedge funds. The seniors caught up in these schemes can face potential tax liability, loss of privacy and legal concerns. The veto leaves California seniors exposed to (STOLI) fraud.”
Source: American Council of Life Insurers
