Stranger/Investor Originated Life Insurance

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WHAT ARE THE SIGNS THAT THIS IS A SCAM?

An investor offers to pay you a fee to purchase life insurance you otherwise would not buy. The investors (strangers) then pay all of the premiums in exchange for being named beneficiary on the policy. When you die, your loved ones receive no benefit. The sooner you die, the more money the investors will make.

Stranger/Investor Originated Life Insurance transactions are illegal in Ohio. STOLI schemes take advantage of legal life settlement transactions where you are paid a lump sum amount – usually greater than you insurance policy’s cash surrender value – for a life insurance policy you no longer need.

Unlike a traditional policy where the insured's loved ones are beneficiaries of the death benefits, in a STOLI arrangement, an investor group (strangers) will likely acquire an interest in the life of a participant.


HOW CAN CONSUMERS PROTECT THEMSELVES?

A life settlement or STOLI transaction may seem like an easy way to make some extra money, but be wary if you are approached by someone who offers to fund a policy for you.

Before selling your policy or agreeing to let someone fund one for you, consult a trusted advisor or contact the Ohio Department of Insurance (1-800-686-1526 or www.insurance.ohio.gov).

Participation in a STOLI transaction – or a life settlement – may affect the participant’s ability to purchase additional needed life insurance in the future. Participation may also result in higher premiums for additional coverage and/or tax liabilities.

If you participate in a STOLI transaction, you could face criminal charges.


HOW TO REPORT IF YOU’VE BEEN A VICTIM

Ohio Department of Insurance Fraud Hotline: If someone approaches you and offers you money so they can take out a policy in your name, call 1-800-686-1527.


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For more information on preventing senior scams, visit these Web sites:

Ohio Department of Insurance – Elderly Insurance Scams

Ohio Attorney General’s office – Elderly Fraud

Medicare.gov – Medicare Fraud

U.S. Department of Health & Human Services and U.S. Department of Justice – STOP Medicare Fraud