Weeding out investor-originated life insurance policies is necessary for the financial and moral health of the life insurance industry.
Speakers made that argument here at the annual meeting of the American Council of Life Insurers, Washington.
Separating IOLI policies from policies that are being sold because they are no longer needed is easier said than done, said Ken Kies, a federal policy specialist in the Washington office of Clark Inc.
The Louisiana Department of Insurance, for example, tried to describe procedures that insurers can use to avoid IOLI transactions, but it also barred insurers from denying a policy based solely on the insured’s intent to sell the policy or on how the policy is financed, Kies said.
The IOLI industry is threatening favorable tax treatment of life insurance death benefits and could affect policy pricing, Kies said.
Stanley Tulin, the chief financial officer at AXA Equitable Life Insurance Company, New York, who is retiring this year, said IOLI clashes with insurers’ mission “to deliver death benefits to widows and orphans.”