Stranger Originated Life Insurance
- A life insurance policy purchased by an entity that does not have an insurable interest in the insured. Stranger-originated life insurance is effectively illegal in most countries because by law, the originator of a life insurance policy must have an insurable interest in the insured. A way around this law is to have an individual take out a life insurance policy on themselves and then have the insured subsequently sell the policy to a third party. This is known as "spin-life" or a "viatical settlement." Trafficking life insurance products is illegal in most Canadian provinces.
Illegal in many Canadian provinces.
spin-life, viatical settlement
Related Terms and Acronyms
- Financing Entity — Definition,
- An entity that purchases an insurance policy or settlement contract.
- Insurable Interest — Definition,
- Something of sufficient worth and benefit that an individual or entity would have reason to insure against its lost.
- Life Insurance — Definition, Very Important,
➥ CanEquity offers life insurance.
- An arrangement where an insurer agrees to pay a benefit to one or more beneficiaries in the event of the policyholder's death.
- Single Interest Insurance — Definition,
- Insurance that covers a single party when more than one party has a stake in a property.
- Spin-Life — Definition,
- A financial industry that specializes in buying life insurance policies from individuals or convincing individuals to take out new life insurance policies with an investor as a beneficiary.
- Surrender Rights — Definition,
- The contractual right for a life insurance or annuity policyholder to cancel his or her policy.
- Transferable Insurance Policy — Definition,
- A life insurance policy that can be sold to another party through a viatical settlement.
- Viatical Settlement — Definition,
- A contract where an individual agrees to sell his or her life insurance policy to a third party before their death.
- Viator — Definition,
- A person who agrees to sell his or her life insurance policy to a third party.