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
viatical settlement, spin-life

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.