In recent years quiet attempts have been made by speculative investors to repeal well-established consumer protections in state law, nullify insurable interest law safeguards, and reignite the spread of fraudulent stranger-originated life insurance (STOLI) practices in Florida. These types of financial schemes target seniors and hurt Florida’s families.
Florida law is quite clear that a person must have an insurable interest to purchase a life insurance policy, meaning he or she (such as a spouse or business partner) would suffer a personal, financial or employment loss from the death of the insured, rather than simply profit from the death. As such, STOLI policies are illegal in Florida because they circumvent Florida’s insurance interest laws.
In a STOLI arrangement, a senior is approached by a speculative investor who offers a too-good-to-be-true deal disguised as an investment opportunity. The senior can get a quick payout if they purchase a new large, unneeded life insurance policy and sign it over to the investor. Once the senior signs over the policy, the investor will collect the benefits when the senior dies
Most seniors do not know that this type of arrangement is considered insurance fraud in Florida. Seniors caught up in these STOLI schemes could be exposed to tax liability, stiff government penalties and legal problems.
Florida lawmakers took steps to add consumer protections into law in 2008, in an effort to safeguard seniors from these predatory STOLI schemes. But now, some interest groups are back to the drawing board, looking for ways to promote these senior scams with legislative changes in Tallahassee.
I strongly urge my colleagues in the House and Senate to stand with me and stop any efforts that may be pushed by speculative investor groups to further profit from STOLI arrangements in Florida.
As chairman of the House Insurance and Banking Committee, I applaud the STANDUP for Seniors Coalition, a new group of senior advocates, veterans and concerned Floridians that is working to protect and educate Florida seniors and their families from these illegal STOLI financial schemes.
Bottom line: Florida seniors and their families cannot afford to be targets of STOLI fraud. I ask my fellow lawmakers to defeat any STOLI-related legislation that would put our state’s most vulnerable population and their hard-working families in harm’s way.