Monday, February 9, 2009

Life Insurance and the Elderly

Posted by: Allison Franklin

Who's cashing in on life insurance policies aimed at elderly?
Minnesota considers a ban on 'stranger- originated' policies sold to the elderly.
By MIKE KASZUBA, Star Tribune
Last update: February 9, 2009 - 12:03 AM

In a State Capitol hearing room crowded with lawyers and lobbyists, the focus at one point turned to -- of all people -- CNN icon Larry King.
The debate: Does a lack of state regulation leave Minnesotans prey to the kind of elaborate life insurance scheme that King says he fell for several years ago?
Some of the state's largest insurance companies are pushing to have so-called stranger-originated life insurance, or STOLI, outlawed in Minnesota. A ban on the arrangements, which a leading state senator called nothing short of "perverse," won approval last week from a Senate committee.
In typical STOLI transactions, speculators persuade the elderly -- especially those with limited life expectancies -- to take out life insurance policies, commonly offering large cash payouts in exchange for having the speculators named as the policy's beneficiary, usually after two years.

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