Penn Mutual Life Insurance v. Greatbanc Trust Co.

MEMORANDUM OPINION AND ORDER

JOHN J. THARP, JR., District Judge.

Stranger-owned life insurance, or STOLI, entails the maintenance of a life insurance policy by an investor who has no insurable interest in the life of the insured. Although the arrangement is unremarkable some cases, such as when an insured sells a policy on the open market as a means of liquefying the asset, other times it violates state common or — increasingly — statutory law. The term “STOLI” (or “SOLI” or “IOLI”) is more often applied in the latter case, for instance when a policy is originally taken out by a third party…