Stranger-Originated Life Insurance (STOLI) and Investor-Originated Life Insurance (IOLI)

Stranger-Originated Life Insurance (STOLI)

• Definition: An arrangement where an individual with no connection to the insured person buys a new life insurance policy on that person's life.
• Purpose: To sell the policy to an investor.
• Goal: To profit financially upon the death of the insured.
• Nature: These arrangements are generally considered unfavorable or unethical.

Investor-Originated Life Insurance (IOLI)

• Definition: Also referred to as STOLI.
• Initiation: An investor takes the initiative to purchase the life insurance policy.