Generally, in order to take out a life insurance policy on someone, you must have an "insurable interest" in the life of that person.  "Insurable interest" is defined in our Florida Statutes at Section 627.404.  However, Stranger-Originated Life Insurance (STOLI) transactions involve a plan to initiate or originate a life insurance policy for the benefit of investors who seek to profit from purchasing life insurance on a stranger.  Many, if not most, of these transactions involve using fraudulent means such as misrepresentation, falsification, or omission of material facts on the life insurance application.  (Under Florida’s "incontestability" statute, Section 627.455, an insurance company cannot void a policy for application misstatements after the policy has been in effect for more than two years – even fraudulent misstatements.)

The Office of Insurance Regulation report documents that many of these STOLI transactions involve life insurance on seniors, and sets forth in the report many of the adverse consequences that can occur.  A copy of the Florida Office of Insurance Regulation STOLI report can be downloaded by clicking here.