The Ohio Department of Insurance has adopted a rule governing the questions life insurers may ask to discourage possible stranger-originated life insurance (STOLI) transactions.
The Ohio STOLI questions rule was approved earlier this week following a review by a joint committee representing both chambers of the Ohio Legislature.
The department revised language used in the original STOLI draft in response to life settlement industry objections that the original version went beyond the requirements of a 2008 Ohio STOLI law.
In a STOLI transaction, investors arrange for a consumer to apply for life insurance. The investors pay the premiums in the hope of collecting the death benefits when the insured dies.
The STOLI law says insurer questions are "supposed to be related to detecting whether STOLI existed at the time of the application or policy issuance," says Brian Smith, president of
