Iowa and Kansas have become the latest states to implement legislation aimed at protecting seniors from unscrupulous life insurance sales practices. Legislators in those states are taking aim at stranger-originated life insurance, the practice of speculators buying insurance policies on the elderly with the sole intention of selling the death benefits to investors.
Seniors risk legal and financial trouble when they are convinced to take part in STOLI transactions. They must lie to the insurance company when asked if their intention is to sell the policy and they can face unexpected taxes and fees.
Organizations like the NAIC, ACLI, AALU and NAIFA are leading the effort to get states to take action on STOLI sales.
“Legislators in Iowa have taken great strides in underscoring the true value of life insurance and in protecting the interests of senior Iowans,” says Jeffrey Taggart, president of NAIFA. “Insurance was never intended to be used as a vehicle for financial speculation on human life.”