Stranger Originated Life Insurance

Definition

  • 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.

Notes
Illegal in many Canadian provinces.

Synonyms
spin-life, viatical settlement

Acronyms
STOLI

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,
    • An arrangement where an insurer agrees to pay a benefit to one or more beneficiaries in the event of the policyholder's death.
    CanEquity offers life insurance.
  • 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.
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