Click here to listen to ACLI President and CEO Frank Keating’s remarks.
Washington, D.C. (May 16, 2008) — Oklahoma Governor Brad Henry (D) has signed legislation that will help deter an abusive transaction that undermines the integrity of life insurance and exposes senior citizens to possible unexpected taxes and legal liability.
Governor Henry today gave final approval to SB 1980, legislation passed unanimously by both the Senate and the House that takes aim at stranger-originated life insurance (STOLI). STOLI is a growing misuse of life insurance in which senior citizens are induced by financial speculators such as hedge funds to purchase life insurance they otherwise would not buy. The seniors then transfer rights to the death benefits to the hedge funds, who hope to profit when the seniors die. And the sooner they die, the higher the profit.
“I’m proud that Oklahoma is one of the nation’s leaders in combating these terrible arrangements. STOLI schemes threaten seniors’ privacy and exposes them to litigation. Their estate planning options also could be affected by STOLI. But thanks to the passage of STOLI legislation, seniors now have a new level of protection against unscrupulous sales,” said Frank Keating, president and CEO of the American Council of Life Insurers (ACLI). Keating is a former two-term governor of Oklahoma.
“Life insurance should never be initiated solely as a vehicle for wagering on human life,” Keating added.
“We’re very pleased to see Oklahoma joining the growing number of states making important efforts to combat STOLI abuses,” commented NAIFA President Jeffrey J. Taggart, CLU, ChFC, LUTCF. “Legislation like this will help preserve the integrity of the life insurance industry, and NAIFA commends Governor Henry for signing this law and helping that cause.”
SB 1980 is based on model legislation developed by the National Conference of Insurance Legislators (NCOIL), the association of state legislators with insurance oversight responsibilities.
In addition to Oklahoma, nine other states have passed STOLI bills. They are: North Dakota, West Virginia, Maine, Indiana, Kansas, Nebraska, Iowa, Connecticut and Hawaii.
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About ACLI: The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association whose 353 member companies account for 93 percent of the life insurance industry’s total assets in the United States, 93 percent of life insurance premiums and 94 percent of annuity considerations. In addition to life insurance and annuities, ACLI member companies offer pensions, including 401(k)s, long-term care insurance, disability income insurance and other retirement and financial protection products, as well as reinsurance. ACLI's public Web site can be accessed at www.acli.com.
About NAIFA: Founded in 1890 as the National Association of Life Underwriters, the National Association of Insurance and Financial Advisors comprises nearly 800 state and local associations representing the business interests of 60,000 members nationwide. Members focus their practices on one or more of the following: life insurance and annuities, health insurance and employee benefits, multiline, and financial advising and investments. NAIFA’s mission is to advocate for a positive legislative and regulatory environment, enhance business and professional skills, and promote the ethical conduct of its members. Visit NAIFA’s website at www.naifa.org .