Stranger Originated
Stranger originated life insurance or STOLI is a life insurance policy that is held or financed by a person who has no relationship to the insured person. Generally, the purpose of life insurance is to provide peace of mind by assuring that financial loss or hardship will be alleviated in the event of the insured person's death. STOLI has often been used as an investment technique whereby investors will encourage someone (usually an elderly person) to purchase life insurance and name the investors as the beneficiary of the policy. This undermines the primary purpose of life insurance, as the investors would incur no financial loss should the insured person die. In some jurisdictions, there are laws to discourage or prevent STOLI.
Read more about this topic: Life Insurance
Famous quotes containing the words stranger and/or originated:
“He is a stranger to me but he is a most remarkable man—and I am the other one. Between us, we cover all knowledge; he knows all that can be known and I know the rest”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)
“Who originated that most exquisite of inquisitions, the condolence system?”
—Elizabeth Stuart Phelps (1844–1911)