Choice of Law Can Be Key When Fighting Life Insurance Fraud
In his Insurance Fraud column for the New York Law Journal, Evan H. Krinick discusses a recent decision by the U.S. Court of Appeals for the Second Circuit, ‘AEI Life v. Lincoln Benefit Life Co.’, which highlights the importance of knowing which state incontestability statute applies to a challenge to a stranger-originated life insurance policy.
A stranger-originated life insurance (STOLI) policy is a life insurance policy obtained as an investment for a stranger, rather than for the benefit of the insured’s beneficiaries. Public policy disfavors STOLI policies because, among other things, legislators consider them to be wagers on human life. See, e.g., N.Y. Ins. Law §7815(c) (“No person shall directly or indirectly engage in any act, practice or arrangement that constitutes stranger-originated life insurance.”).
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