Deceptive Insurance Deals (STOLIs)

Here Comes More Trouble! Since the rescinded policy is in your name, the insurance company will refund the premiums directly to you—with interest. But remember who paid those premiums: the STOLI promoter. It won't be long before you're harassed to return the money, the interest, and even the up-front cash you were given.

This type of transaction is still fairly new. It’s unethical, its promoters are predatory, and it violates insurable-interest laws in every state and the District of Columbia. "We don't sell insurance policies to consumers for them to then sell them to speculators for profit," says Dolan, "but STOLIs have become a thorn in the side of the insurance industry. As a result, state insurance commissioners and state legislators acted very quickly to enact model laws to deter them, and STOLIs have since been outlawed in 28 states. But it takes time before the risks attached to these arrangements become part of the public consciousness. The bottom line is, if it sounds too good to be true, it is."

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