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Florida’s Office of Insurance Regulation to Hold Public Hearing on Life Insurance Companies’ Practices
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On Friday, April 22, 2011, on Florida’s Office of Insurance Regulation’s website, the following article appeared: The Office will conduct a public hearing to evaluate a potential industry practice that involves claim settlement practices, use of the U.S. Social Security Administration’s Death Master File and compliance with unclaimed property laws.
It was announced that the Florida Office of Insurance Regulation (Office) delivered investigative subpoenas to Metropolitan Life Insurance Co. and Nationwide Life Insurance Co. requesting that a corporate representative appear in Tallahassee to explain their company’s business practices regarding these issues. Although these are the first companies to receive subpoenas – the Office is examining other companies on this issue because the Office’s information encompasses a substantial part of the life insurance industry.
Call a Securities Arbitration Lawyer for a free consultation on how to recover your investment losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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Insurance Fraud Alert-
Stranger Originated Life Insurance or STOLI.
Brokers and financial advisors promising big profits on resale of universal life policies.
Many stockbrokers and financial advisors are having their clients purchase large universal life insurance policies with the promise of a big profit on resale after the two year contestability period passes. There is a promise that the profit from the sale would not only cover the premiums but would put a profit in the insured’s pocket with enough money to purchase another policy and do it all over again. Unfortunately, these brokers are over promising and grossly over representing the legality and liquidity of the resale of the insurance policy especially when it was purchased for the sole purpose of reselling.
Another common insurance scam facilitated by ignorant or greedy stockbrokers or financial advisors is the Stranger Originated Life Insurance or (“STOLI”) life insurance transaction. STOLI’S are heavily regulated transactions where a lot of illegality can take place if not executed correctly. Many states have made laws or are making laws prohibiting STOLI transactions. STOLI policies are life insurance policies where an insurance investor has their client (usually an elderly person) put their name as the beneficiary on the life insurance policy even though the insurance investor has no insurable interest in their client. This means that the insurance investor is not a relative and is only making the STOLI transaction in order to make money off of the insured person after they die.
STOLI transactions are marketed towards the elderly, especially the elderly who may not live much longer. These insurance investments are generally held for the two year contestability period then resold on the market. Many stockbrokers and financial advisors have been getting involved in the sale of life insurance due to the excessive commissions generated off of universal life insurance policies. Investors who probably don’t need life insurance are being pressured into purchasing these policies and listing the insurance investors as the beneficiaries. The elderly may be “wined and dined” by the insurance investor and told that they can get a cash bonus by making the STOLI transaction. Unfortunately, seniors are often times unaware that they have to pay taxes on the cash bonus and could be charged with theft by agreeing to the transaction. Also, STOLI transactions may make it harder for seniors from getting other life insurance in the future.
In addition, STOLI policies can be bought and sold to more than one person so many insurance investors are, in a sense, wagering on someone’s death.
If you purchased a STOLI or a viatical investment or your broker convinced you to purchase a universal life insurance policy for the purpose of reselling it you may be able to bring a legal claim for recovery of your money. For more information call Soreide Law Group at 1- (888) 760-6552 or visit www.stockmarketlawsuit.com.
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